By Andrea Illy
Building the Bridge from Today to Tomorrow
Written by Andrea Illy
The story of our world today is of present battling future—of today’s needs and desires at odds with tomorrow’s imperatives. Now that the question of climate change is settled (save for the skeptical rhetoric of some, safeguarding narrowing interests), there is an understanding among individuals, enterprise and governments that consumption without care is a recipe for an unsustainable future.
Add to the mix structural debt crises, rampant population growth, an ever-shrinking water supply, and perpetual unrest throughout the Middle East and beyond, and you get predictions of a mid-century tipping point, whereby living conditions will rapidly diminish for many.
Armageddon-like warnings aside, there must be a new way of economic growth, and we can no longer tap population expansion as the engine, with too many people chasing too few resources. We must move away from economies fueled by combustion and embrace a new technological revolution that can rapidly scale and unleash alternative energies, with first-mover advantages enriching the smart risk takers and countless benefits for society.
I am hopeful. For certain, I’m a realist, having studied these issues at length. Leading a company that depends on the earth in the most fundamental ways, I’m well aware of the huge challenges at hand. I am hopeful because I’ve seen how fundamental changes to our business 30 years ago have produced benefits far beyond those to illy, where fulfillment of shorter-term needs and goals also created a better future for our products, our stakeholders, and our planet. I’ve seen how present and future needn’t be antagonists, but can be good partners.
At the heart of our success beat two basic values that drive every big decision we make: excellence and ethics. Excellence is realized as a passion for everything we do, driving the pursuit of ever-higher quality, and forming the core of our operating philosophy. Ethics is expressed by seeking growth that is durable, meeting the needs and desires of illy stakeholders both today and tomorrow, and treating those stakeholders with transparency and respect.
This idea of durability is critical. Businesses must stop running their houses into the ground, getting the most from their living space right now, then moving on once outgrown. Rather, we must continually add bricks to our current dwellings, fortifying them for tomorrow with every action taken today.
Companies have the capital and knowledge to do this. The key is shifting the view of profit away from a mechanism for short-term enrichment to the engine of long-term growth and value creation. The mission of the durable company is to perpetually increase the value it creates for all stakeholders, of which shareholders are merely one, and not paramount. That necessitates another shift for many enterprises, from shareholder- to stakeholder-centric.
Only stakeholder companies can effectively pursue sustainability’s triple bottom line of improving economies, societies, and ecosystems. illy strives to improve the economic lives of all of our stakeholders—consumers, growers, and shareholders—guided by the theory of shared value capitalism. As described by Harvard’s Michael Porter, the way to economic sustainability is through creating economic value that also generates value for society by addressing its needs and challenges. The profit motive, corporate responsibility and social good then become partners instead of enemies, in tandem driving innovation and productivity growth. Successfully implementing the shared value approach requires prioritizing long-term benefits over short-term gains and redefining the firm’s purpose as creating shared value, not profit alone.
When it comes to enterprise’s role and effectiveness in sustaining societies, Maslow’s concept of self-actualization provides a solid foundation. Self-actualization, he posits, represents an individual’s growth until their highest needs are fulfilled. This five-stage hierarchy begins with satisfaction of basic physiological needs such as food, sleep and air. Next come feelings of security, of belonging and love, and then self-esteem. At journey’s end is creative self-growth and a sense of life’s meaning and fulfillment of personal potential. Companies have the power to guide stakeholders along this path.
The final pillar, environmental sustainability—the one most discussed and best understood—is borne of a commitment to leaving ecosystems that companies utilize and impact in at least as good shape as they found them. The fundamental changes to our business model three decades ago serve this triple bottom line in an integrated fashion. We adopted a quality-centric model that perpetually generates increasing returns for all, starting with growers—primary among our stakeholders in continually improving quality in a responsible manner, yet the weakest economic players.
We determined that the only way to achieve industry best quality was by buying directly from growers rather than markets or co-ops like Fairtrade, which cannot fundamentally influence quality. Our proposition to growers: meet illy’s quality standards and we will purchase at a guaranteed profit, not just a market premium. The system started in Brazil and is now operating everywhere we source coffee. The effects have been remarkable. Entirely new growing regions have emerged, with marked quality upturns in others, and increasing returns for all stakeholders—not least consumers, who experience more pleasure with each cup, fueling an expanding market that enables increased investment in growers, research and product development that, in turn, raises the quality bar higher—a virtuous cycle creating value shared by all.
Knowledge is fundamental to building lasting societies, and education is endemic to our commitment to growers. We don’t expect growers to magically raise quality to our standards. Rather, we invest significant financial and human resources to improve their yields both for this season, next, and many beyond. We also teach farm owners business fundamentals so they develop not just better coffee, but an enduring enterprise that creates value and a better, safer, more secure and fulfilling way of life for themselves, their employees, and their communities.
As for environmental sustainability, illy has long known that coffee grown and processed with respect to all ecosystems involved also creates better coffee, short and long term. We teach growers the latest responsible, low-impact techniques and have modernized a discarded processing method that requires a fraction of the water utilized in more conventional methods. We launched a project to recover much of the heat from emissions at our roasting operation, and contribute to numerous carbon reduction and sustainable agriculture initiatives.
I feel lucky because illy products bring joy to peoples’ lives and are essential to many of their days. Connecting back to Maslow, I see our ultimate mission as helping our stakeholders realize their best selves. Beyond our quality-centrism, we make beauty intrinsic to our offerings, including a cup designed to please the eye while functionally enhancing the espresso-drinking experience. Our advertising encourages people to “LIVE HAPPilly”—to find beauty that lives everywhere and transforms ordinary, everyday experiences into extraordinary ones, with our coffee and brand as the muse.
Economic theorist Jacques Attali says altruism is the new form of selfishness. Otherwise put, as the world grows more complex, individuals, enterprises, and nations must rely more on others to fulfill needs and improve lives. Instead of transactions starting with, “what can I get out of you,” the predicate should be, “how can I help you?” Attali sees an ultimately democratic mankind, powered by altruism viewed as essential to economic progress, not an impediment. When that happens, today and tomorrow will be partners, not enemies.