Using Conversation to Change the World

Paul Dolan of Fetzer Vineyards is using conversation to create sustainability inside a major corporation and across his industry.

by Marjorie Kelly

It was a dark and stormy night, as a dozen business people huddled by the light of the kerosene lamp. The year was 1992 and the place was a remote homestead – sans electricity – 20 miles off the main road, deep in the forest of northern California. In the group were seven newly minted managers from Fetzer Vineyards in Hopland, plus three corporate folks from the Louisville, KY. headquarters of Brown-Forman, the public corporation that had acquired Fetzer just two months earlier. Leading the group was the audacious Paul Dolan, who after 15 years at Fetzer had just been appointed president. He was out to change the world. Fetzer was his vehicle.

“Why are we in business?” he asked the gathering. The obvious answers came quickly – to produce quality wine, to make money – but he urged them to go deeper. Tired of the question, some tried to change the subject. But they were stuck in the woods with nowhere to go, and Dolan kept asking the same question. Eventually they found agreement. They wanted to produce great quality wine at a good price, and they wanted a good work environment, as well as good partnerships with distributors, and they wanted to farm responsibly. Ultimately, they crystalized their core purpose: Fetzer people, enhancing the quality of life.

It’s one of the stories Dolan tells in his book, True to Our Roots, which chronicles how he and his staff transformed Fetzer into a genuinely sustainable company – and made plenty of money along the way. Through the 1990s, Fetzer earnings grew an average of 15% a year as sales doubled. Fetzer is now the largest selling brand in the U.S. for premium wines in the $7 to $10 range, and it makes nearly 4 million cases a year. Wine & Spirits magazine name Fetzer the “Winery of the Year” seven times in the 1990s for its category.

While sales were doubling, Fetzer reduced the amount of waste hauled to the landfill by 97%. In 2002 production facilities sent less than 40 cubic yards to the landfill – compared to the starting volume of 1700 cubic yards. Fetzer now farms its grapes entirely organically, and is helping dozens of other independent growers convert to organic farming. Fetzer’s commitment is to use only organic grapes by 2010.

The company has a Sustainability Team, called E3, which manages for the triple bottom line. E3 has helped find more efficient motors, insulate better, switch from petroleum to biodiesel fuel and start an employee commuter van program. Fetzer also sponsors English-as-a-Second-Language programs for its Spanish-speaking workers and has opened its organic garden to local educators.

In 1994, Dolan challenged his team to build a new administration building that didn’t deplete natural resources in its construction or operation. They did it – with a building that’s won architectural awards, and which cost the same as a conventional building. The main construction material is rammed earth, which needs no further insulation. It has solar panels on the roof for energy, and ceilings finished with staves from an old beer tank. Much of the wood was reused from existing structures – including oak floors salvaged from a condemned office building.

More broadly, Dolan has led an effort to spread organic farming in the wine industry. As a board member of the Wine Institute, he helped spearhead an effort – in partnership with the California Association of Winegrape Growers – to create a Code of Sustainable Winegrowing Practices for California, announced in November 2002. The idea is to advance organic farming in the wine industry and make it an example for all of agriculture.

The key to it all, Dolan writes in True to Our Roots, is conversation. Conversation about sales and profits, he notes, is one of the most well-developed conversations on Earth. We need to insert a conversation about sustainability into the conversation about profits, and keep it there until they become the same conversation. Talking is vital, he believes, because there is no roadmap for what we’re trying to do. Conversation is one of the few processes almost guaranteed to produce new insights and ideas.

As leaders, we need to structure conversations about sustainability so they take place without us, he says. We need to schedule regular get-togethers. We need to mention sustainability at every gathering. And we need to remember that a report about a conversation is not a conversation, because it’s lifeless.

That first meeting by kerosene lamp, Dolan writes, was really about generating conversation. Similarly, when the company decided to go all-organic, its first move was to gather 25 managers for a conversation.

Today, Dolan is taking the conversation into the larger Brown-Forman family of consumer product companies. With $2.4 billion in 2003 sales, Brown-Forman owns such brands as Hartmann luggage, Lenox china, Jack Daniels Tennessee whiskey, Southern Comfort, and Finlandia vodka.

Business Ethics editor Marjorie Kelly caught up with Dolan after he returned from a two-day sustainability conference for Brown-Forman managers that he instigated.

Paul Dolan: Yesterday we spent the day having our first Chairman’s Conference on Sustainability. In the room were people like farmer-poet Wendell Berry, Bob Scrowcroft, director of the Organic Farming Research Foundation, plus people from Interface, Gap, and Ben & Jerry’s. We did small panels with about 100 people from Brown-Forman, which was all their senior management, from the CEO on. They were so engaged. And it was the chairman Owsley Brown who set the context by saying, “This is important to me, and it’s important enough that we’re having a complete conference on it.” When I left they were breaking into small groups and looking at how to go forward and jump into this.

My audacious commitment has always been to transform them before they had the chance to change us! And it’s happening. Since the Brown family is so involved they have a different culture than many companies. They own over 50% and have been with the company many generations. They approach business from a longer term perspective. They are driven very much by the bottom line, but they are also involved with their local community. And they see opportunities on the environmental side.

Marjorie: Does Brown-Forman set your goals for the year? How does it work being part of a larger company?
Dolan: We set our own goals – not only financial, but environmental and social goals. A key goal is bein 100% organic by 2010, which means educating our growers, because there is still some fear. With UC Davis we put together a 3-day symposium for our farmers and had 50 attendees with 65 on the waiting list. We’ll do another soon with 100 farmers. Growers are no longer asking, “Why do I need to do this?” but, “How do I do this?”

We walk them through the code of sustainable business practices. It’s a 490-page self-assessment guide that is being taken around to all wine communities in the state. They see this is the future and they better get up to speed.

Marjorie: I know you started on the organic rad because you were convinced it made better grapes.
Dolan: Early on, I woul
d try to guilt the growers into organic – saying, you should do this for your kids. It wasn’t until we converted our own vineyards that I saw it improved quality. Now we can demonstrate it’s also more cost-effective. We farm organic at basically the same cost as conventional. Plus we get better yields. If you get an extra ton per acre, you get a better return.

Marjorie: Is that how you tell the story to Brown-Forman? Do you wrap this in a profit story?
Dolan: We were just recently able to wrap it in a profit story. I was questioned pretty hard recently, having made the statement we would be 100% organic by 2010. They questioned what that would mean for the corporation. We had to look at our cost structures and do comparative studies. So we were able to demonstrate cost-effectiveness.

We were also able to demonstrate the shift among consumers, who are interested in health and nutrition. We’re putting together plans to position ourselves as “a good choice for you.” We can’t make health claims, but we can describe the healthy practices we use in the vineyards, and the good stewardship inside the winery.

Marjorie: What do you think will come of the Brown-Forman conference?
Dolan: If you keep sustainability in the everyday conversation, you’ll focus on it. If not, you won’t do much. That’s what we will organize around at Brown-Forman. In the production area, teams will be challenged to organize themselves so they discuss it and set goals for themselves that they can measure.

I’m a pretty unstructured guy, I have to admit, and at Fetzer I don’t necessarily look at the metrics. It’s important to see change though. What’s important is to create an environment in which conversation can occur. When E3 meets, we go around the room and check in on what’s going on, and the results show up. We announce what happened last week and what we’re planning next month. It’s not necessary to set individual goals. We set broad-range goals like zero waste, or recycling 100% of the water back into the vineyards.

It’s part of our culture. We recycle 97% of our waste. We don’t even have wastebaskets anymore. When you finish a meal, you either have a paper basket, a plastic basket, a metal basket, or a scrap food basket – it has to fit in one of those, because there’s nowhere else for it to go!

Marjorie: In your book, you write about reaching out beyond Brown-Forman, to change business as a whole.
Dolan: I feel strongly that business is where change can be made in the world. It’s where the answers will be found, through the resources business has and its leadership potential.

Marjorie: Why do you think business is the place where change will come from?
Dolan: It has to, because business manages and controls all the resources. For us to make this a world that works for everybody, it will come through expanded awareness of business leaders.

And it starts with conversation. Once that kicks in, things will happen. Conversation shifts mindsets. This is, ultimately, how we will change the world.

++++

True to Our Roots: Fermenting a Business Revolution, by Paul Dolan, was published in November 2003 by Bloomberg Press.

Learn more about Fetzer: www.fetzer.com

FROM Business Ethics, winter 2003, a SustainableBusiness.com Content Partner.