Raising the bar on how business gets done

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THE NATION’S NEWSPAPER
As seen in
Special
Reprint
Edition
Money
March 14, 2005
Raising the bar on how
business gets done
Clif Bar is good for you, environment
By Julie Schmidt
USA TODAY
dioxide generated by the company's manufacturing, offices,
business travel and employee commutes, it says.
BERKELEY, Calif. — Mary Erickson, 82, sits in the kitchen
where it all started 15 years ago.
"Gary feels a calling to craft a new way of doing business,"
says Lanny Vincent, an innovation management consultant
who has worked for Clif Bar as well as for giants such as
Hewlett-Packard. "He and Kit want to show that it's possible to
have a business that not only makes money but does good."
Her kitchen, where she and son Gary first made the first Clif
Bar. They started with her cookie recipe.
"Gary said it cannot have eggs or sugar or butter," she says. "I
said, 'Gary, what are you going to keep in?' "
All because a guy got hungry and disoriented.
It was 1990 and Erickson, now 47, was on a 125-mile oneday bike ride that turned out to be 175 miles. He was tired and
had 50 miles left to ride.
The right stuff, apparently.
The son she describes as "average" as a boy and then, with a
smile, "well above average," has grown Clif Bar into a $100million-a-year venture. The company is a leader in the billiondollar energy-bar industry targeting athletes and healthminded consumers. It's been profitable every year since its
1992 launch.
But profit is only one definition of success at Clif Bar. Serving
people and the planet are just as important.
Clif Bar, owned by Erickson and his wife, Kit Crawford,
devotes the equivalent of 1% of revenue to community causes.
That includes donating money to breast-cancer prevention and
letting employees volunteer on company time for Habitat for
Humanity. Clif Bar employs a "Wellness Diva" whose job is to
find ways to keep Clif Bar's 147 employees healthy and
productive. That includes fitness classes and health screenings.
Clif Bar also has a staff ecologist who analyzes the company's
environmental impact. One result: Clif Bar's investment in a
wind farm creates enough clean energy to offset the carbon
He'd eaten five of his six PowerBars, a pioneer of the energybar industry. "I couldn't take another bite," he said. "I thought, 'I
could make a better bar than this.' That was it, my epiphany."
He headed to Mom's kitchen and, after dozens of failed
recipes, came up with Clif Bar, named after his father Clifford,
80. Top ingredients include brown rice syrup, soy rice crisps
and roasted soybeans — ingredients that provide fast energy.
Clif Bar launched at a bicycle show two years later. It was the
second major player in a new food category headed for
explosive growth. Within three months, 700 bike shops carried
the bar. Erickson sometimes slept in his car between shifts at
the bakery making them. First-year sales hit $700,000.
By 1994, the company had two employees plus Erickson and
a partner who had joined him in 1986 in running a small
bakery. "Within any 24-hour period, I might be developing a
new Clif Bar flavor or sweeping the floors," Erickson says.
Reprinted with permission. All rights reser ved.
AS SEEN IN USA TODAY’S MONEY SECTION, MARCH 14, 2005
That's still true, says 10-year Clif Bar
employee Paul McKenzie. "Just the other
day, no one was here who could drive a
forklift. Gary said, "I'll do it.' "
Early ambition
Erickson grew up in a middle-class
home, the son of a California state
workplace inspector and a schoolteacher
mom. His determination surfaced early.
At 11, he set out to be the best pitcher
in his baseball league. He threw so many
pitches he tore his rotator cuff. He
wanted skis, so at age 14 he got a parttime job at a ski shop to get an employee
discount.
He wanted to travel the world, so in
1981, he worked three jobs — parking
cars, tuning skis and hammering nails —
banked $20,000 and set off.
While on a 1,200-mile bike ride over 10
days in 1986, he discovered what would
become Clif Bar's philosophy: Take the
white road, not the red.
Each day, he and his biking partner
scoured maps to plot their course. The
red roads, so marked on the map, were
big and the most direct. But they were
loud, busy, dangerous and unpleasant.
The white roads were small, not the
most direct, but the most pleasant.
Sustaining the planet
Some results of Clif Bar's
environmental focus:
u Eliminated use of shrink wrap by
redesigning boxes, saving $450,000 a
year.
u Uses organically grown cotton and
non-toxic inks on promotional T-shirts,
sweatshirts and tote bags. In 2003, that
meant more than 13,000 T-shirts and
6,000 tote bags.
u Packs products in 100% recycled
cardboard.
u Diverts more than 80% of office
trash from landfills through the use of
recycling and composting.
u Invests in wind farm in South
Dakota to create enough clean energy a
year to offset carbon dioxide emissions
generated by the company, the
equivalent of removing 340 SUVs from
the road for one year.
Source: Clif Bar
"I've seen what happens to companies
that get bought. . . . They lose the values
that were set up," says Erickson. Clif Bar
is "like a kid. You want to see it go off and
do something meaningful."
Change of heart
Erickson almost took the red road with
Clif Bar.
In 2000, he decided to sell. Nestle had
bought PowerBar and Kraft had bought
Balance Bar, his top competitors. They
could bury Clif Bar with advertising
bucks. His partner wanted out. Erickson
became convinced selling was the right
thing.
He told his parents, his friends, his wife.
They all supported him. They all knew he
wasn't being honest with himself. As he
waited to sign the contract that would
make him rich, Erickson started to shake.
He couldn't breathe. He took a walk
around the block and began to weep.
"I felt in my gut, 'I'm not done,' " he
writes in his book, and then, "I don't
have to do this." He felt free "instantly."
Back at the office, he told his partner,
"Send them home. I can't sell the
company."
It was a bet-the-company move. He
needed $80 million to buy out his
partner and service the debt. Clif Bar had
to grow fast to handle it. He took back
"Companies on the red road listen to a
lot of noise: the market, shareholders,
the board, economic consultants,
advisers and conventional wisdom,"
Erickson wrote in his 2004 book, Raising
the Bar, Integrity and Passion in Life and
Business, which tells Clif Bar's story.
Clif Bar, he says, is a white-road
company.
Shareholder return isn't defined by
profit but by "knowing that we create
healthy products that people want,"
Erickson says.
Clif Bar's goal isn't to go public, as is
often the path of business in America. Its
goal is to stay private so it can continue
to do good works.
Reprinted with permission. All rights reser ved.
Page 2
AS SEEN IN USA TODAY’S MONEY SECTION, MARCH 14, 2005
the CEO reins from his partner and ran Clif Bar for four years.
The last two have been challenging. While still profitable, Clif
Bar sales leveled off after 2002 when they hit $106 million,
Erickson says. He won't be more specific. The low-carb craze
hurt the high-carb-bar business and Clif Bar's own low-carb bar
flopped.
L ast year, Erickson handed the CEO reins to Sher yl
O'Loughlin, who learned the consumer food business at
General Foods and Quaker. Clif Bar strives for natural growth as
more consumers seek healthy products. Little money goes to
advertising, which Erickson says creates unsustainable
demand.
The strategy seems to be working. Luna, Clif Bar's bar
targeting women because it is lower calorie and has higher
calcium and iron, posted a 7.6% rise in sales for the 52-week
period ending Jan. 23, says market research firm Information
Resources. Clif Bar sales rose 10% while six other top sellers lost
ground. That includes the No. 1 bar from the low-carb-focused
Atkins.
Erickson and his wife now focus on shepherding the
company's soul. O'Loughlin looks after the numbers. Even for
liberal Berkeley, Clif Bar has a hip feel. When O'Loughlin arrived
for her first interview seven years ago, "A dog met me at the
door," she says. They still roam around behind their masters.
Employees can hop on a two-story rock-climbing wall in the
office, or use the company gym, with personal trainers. There's
a washer and dryer for personal laundry, a car-wash service,
on-site masseuses twice a week and a hair stylist who comes
by once a week. Employees are encouraged to volunteer about
21 hours a year for community service on Clif Bar's time. They
also get three-day weekends every other week by working
longer days.
About Gary Erickson
First job: Paper route.
Fitness plan: Works out at least 10 hours a week.
Breakfast routine: Fruit smoothie with four kinds of fruit,
organic yogurt, organic flaxseed oil, fiber blend, vitamin
supplement.
Drives: Gray Audi A6 wagon.
College: Graduated in 1980 with bachelor's of science in
business from California Polytechnic State University.
Family: Wife Kit Crawford, three children, 20, 16, 11 (two
from Kit's previous marriage).
Professional kudos: Named "Best Boss" in 2003 by Fortune
Small Business.
Why he's successful: "He's got the guts," says dad Clifford
Erickson.
How family life changed him: "Maybe he won't do 62
miles an hour on a bicycle down a mountain pass anymore,"
says biking and climbing partner Jay Thomas.
The risk he didn't take: In 1982, he learned that Kit had
broken off an engagement to someone else. But he was in
Europe and wouldn't be back in the USA for six months. He
wrote her a letter asking her to wait for him so he could take
her to dinner. He never sent the letter. "I chickened out," he
says. By the time he returned, she had met someone else
and was soon married. It wasn't until 1994 that he and Kit
married, 16 years after he first met her and felt an "instant
something."
Warning to entrepreneurs: Don't do 50-50 partnerships.
"You'll have a day of reckoning."
Reminder: "Successful entrepreneurs take who they are
and what they already know and create surprising
combinations."
Source: Clif Bar
No surprise, Clif Bar gets so many job applicants it no longer
advertises most new openings. "They can take me out of here
in a box," McKenzie says.
Erickson and Crawford live north of Berkeley on a 50-acre
farm. She raises chickens and has goats and horses. Gary, often
dressed in jeans and hat, raffles off organic eggs at Clif Bar's
employee meetings.
It's a quiet place for a man who hasn't lived a quiet life.
Erickson has trekked the Himalayas, mountaineered deathdefying ice chutes and drunk 11 espressos in one day. But he
still gets his best ideas while riding his bike for hours because
he can listen to his gut.
When he prepared to sell the company, he hadn't been
riding. "This meant I wasn't listening," he says.
Reprinted with permission. All rights reser ved.
Page 3
Entrepreneurship
Raising the bar on how
business gets done
neurship, synthesis
APPLICATIONS: business, entrepre
get its star t? How do ownDISCUSSION: How did Clif Bar
ford, define success? How
ers Gar y Erickson and wife, Kit Craw
causes? When did Erickson
does Clif Bar donate to community
the company’s philosophy?
get the idea for Clif Bar? What is
nce. How does Erickson
Explain its metaphorical significa
sured? What is Clif Bar’s
believe shareholder return is mea
s?
goal? Why is this unusual in busines
red roads are “big and the
ACTIVI TY: According to the article,
“loud, busy, dangerous and
most direct” paths, but are also
ds are “small, not the most
unpleasant.” By contrast, white roa
your own terms, define “red
direct, but the most pleasant.” In
Then, peruse today’s paper,
road” and “white road” companies.
did each company get its
and identify an example of each. How
operating mo del? Finally,
start? What is its business or
image.
describ e each company’s public
VOCABULARY
1. diva
2. offset
3. innovation
4. epiphany
5. ambition
6. shepherding
Community
USA TODAY Snapshots®
It’s smart to give back
Volunteerism varies by education level.
In 2002, 29% of U.S. adults did charity work.
By completed schooling:
Graduate school
College graduate
Some college
High school graduate
20%
Some high school 13
%
Grade school 8%
53%
43%
33%
Note: 2002 data, latest available
Source: National Endowment for the Arts
APPLICATIONS: responsibility, civics, character education, analysis
What correlation exists
between education and volunteering? For what reasons
might a person’s likelihood of
volunteering increase with his
or her education level?
Statesman George Mason
wrote
in
the
Virginia
Declaration of Rights, “ … it is
the mutual duty of all to practice … forbearance, love and
charity towards each other.”*
What does this mean? How
does charitable giving, in the
form of time or money, benefit
society? (To answer this question, consider what the world
would be like if no one volunteered or contributed to charity.) What conditions could U.S.
citizens improve if everyone
volunteered on a weekly or
monthly basis?
In your opinion, what other
behaviors are citizens bound to
practice toward one another?
How does society benefit when
people look out for the collective good, rather than the individual self?
By Cristina Abello and Suzy Parker, USA TODAY
*Source: www.americanhistory.com
Copyright Reprinted
© 2005 USAwith
TODAY,
a divisionAll
of Gannett
Co., Inc.
permission.
rights reser
ved.All rights reser ved.
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