G2 On Ken Adelman is Leadership
Congress: Gone fishing?
With the economy slowing again, scores of nominations awaiting confirmation and major issues such as climate change and immigration unresolved, Congress has left town for its traditional six-week August recess. Is that smart leadership? At what point should leaders change well-established routines to signal that ‘business as usual’ is no longer acceptable?
co-founder and vice president of Movers and Shakespeares, which offers executive training and leadership development.
Leaders should break routine and be at work in critical circumstances — albeit presuming that the leader’s presence is helpful. Not the case here. As a conservative, I believe the less Congress
the better (especially a liberal Democratic one). Better than the “six-week August recess” (who knew that month had six weeks?) would be an eight-weeks August recess. Best, 10. One exception concerns Senate confirmation for nominees. Here we do need Congress, which should approve the president’s nominee or turn her down but not “hold” the nomination or delay it endlessly. Government needs good people in place, confirmed and working for the nation. We need Congress primarily to get those people in place.
Kathryn Kolbert, a public-interest lawyer and journalist, is director of the Athena Center for Leadership Studies at Barnard College.
ANDREW HARRER/BLOOMBERG
The footsteps of members of the Senate and the House won’t be heard in the Capitol’s hallways for a few weeks yet.
THE LITTLE-GUY ECONOMY A yogurt’s journey from Iceland to the American icebox
New Yorker finds niche by tapping into his Scandinavian roots
by Jill Priluck
ing in Manhattan. Craving the comforts of home during his first Christmas away, he made skyr, Iceland’s yogurt, in his Tribeca kitchen. More than five years later, Hil- marsson’s Icelandic Milk & Skyr supplies Whole Foods, Wegmans and Stop & Shop and boasts nine employees plus about 350 cows from six family farms. Last month, the private-equity firm Revelry Brands acquired a mi- nority stake in the company. While most upstarts struggle
I
to find customers, funding and revenue, Hilmarsson stumbled onto all three almost seamlessly. It’s a rare little-guy-economy tale in a $4.1 billion yogurt market with dozens of brands that pro- mote benefits including “lite” and “fat-free.” Perhaps most re- pellent is Dannon’s Activia, which, known for its $100 mil- lion ad campaign featuring Ja- mie Lee Curtis, supposedly “helps regulate your digestive system.” But the counterintuitive rise of the skyr company, which as of March took in an estimated $560,000 in annual sales, shows that a pricey, understated new product can grab market share, albeit a relatively small one, in a crowded, consumer-driven field. In the age of corn-syrup-infused foods, shoppers simply wanted this pared-down, no-frills yogurt. The high demand begins and ends, of course, with Hilmarsson, who, like a conductor, orchestrat- ed the arrival of Siggi’s, the com- pany’s premium yogurt. A Co- lumbia Business School gradu- ate, he consulted articles from Iceland and food science text- books and became a skyr scholar overnight. Skyr is a thousand-
n late 2004, Iceland native Siggi Hilmarsson was a miser- able Deloitte consultant work-
year-old Scandinavian sta- ple, a thick, strained, high-protein yo- gurt. He
first
made skyr the old-fash- ioned way: by boiling the milk, keeping the pot warm at 100 to 110 de- grees, add-
ing the cul-
tures, in- cubating it and then straining it. “Some of the first batches were aw- ful,” Hilmarsson, a lanky, 6-foot-5-inch fellow with shoul- der-length hair and a beard, said in his 11th- floor office on 26th Street. On vacation, he went upstate to a test dairy facility at Morris- ville State College and perfected his skyr. In start- up-speak, he had a minimum viable product. Success is never preordained in the little-guy economy, and it certainly wasn’t in Hilmarsson’s case. But after his friend Liz Thorpe, the cheese expert and Murray’s vice president, casually planted the yogurt before the specialty store’s buying commit- tee, which wanted to stock it right away, Hilmarsson knew he was on to something. He turned to Columbia Business School’s Michael van Biema for seed cap- ital (the professor offered less than $50,000), quit his job and began searching for a dairy plant in Upstate New York. The product couldn’t be stopped. Siggi’s sold out the first day it appeared at Murray’s. Even more remarkable, the next morn- ing, when the Siggi’s truck ar- rived late, several people were waiting for their skyr. Hilmars-
problem was that he couldn’t cool the product fast enough in large quantities. Aside from the product’s popu- larity, unlike the failed Social Bomb app and numer- ous other start-ups, Hilmars- son hasn’t
had too
many bad surprises, un- less you count his failed honey-raisin experiment — the
raisins in the yo- gurt expanded and became too grape- like. He also had to stop producing pear- mint because the pears had a short shelf life. And at first he was startled by the direct American way of doing business, such as single-line e-mails
involving multimillion- dollar deals and the lack of
emotion involved. “They really push, and they don’t hold it against you if you push back,” he said.
son had found a tiny family farm in Norwich, N.Y., with an under- used plant that had been produc- ing cheese, yogurt and goat’s milk for several years. By then, the summer of 2005, he was pro- ducing 200 cups of yogurt a week. But, step by step over the next few years, more and more people wanted Siggi’s, and soon Hilmarsson was selling yogurt to Dean & Deluca and Bouley Ba- kery. It was a feat. In less than a year,
Hilmarsson negotiated New York state’s agricultural laws, found a milk supply that met his criteria, learned what equipment was needed to make skyr, figured out where to buy it, and got funding. “You wouldn’t believe how many people call me and say, ‘I want to
open a cheese shop’ and don’t know anything and haven’t done any research,” Thorpe wrote in an e-mail.
And in just two years, Hilmars- son would have a problem many founders wish for: too much de- mand. In a “free is the future of business” twist, Hilmarsson do- nated his yogurt to a Hamptons retreat, where a Whole Foods em- ployee fell in love with it. A few weeks later, Hilmarsson was in Austin presenting his skyr to Whole Foods. Hilmarsson would supply half the country’s Whole Foods with five flavors of yogurt, beginning in January 2008. Un- prepared, he shut down and ex- panded his plant so he could ac- commodate a jump of about 15 stores to about 100. The main
Ultimately, the many devotees
of Siggi’s directly benefit from Hilmarsson’s obsession with sug- ar. Siggi’s pomegranate-and-pas- sion-fruit yogurt, for example, has 11 grams of sugar, sweetened with agave, which, while high in fructose, is low on the glycemic index. Yogurt is often deemed healthy but can contain up to 35 grams of sugar per serving — akin to a candy bar. And aside from the nostalgia for his home- land, it’s this aspect of American life that compelled Hilmarsson to create the yogurt in the first place. He had an epiphany when he found a loaf of whole-wheat bread that looked fantastic but didn’t taste right. When he looked at the ingredients, he
With
couldn’t believe the amount of sugar per serving. “Americans went bananas in the ’80s and took the fat out of everything, but that’s not palatable, so they just added sugar,” he said. Having a loyal, health-con- scious fan base is one thing, but it won’t solve issues involving scale. The skyr company is still in the low-to-middle range of food start-ups, and Hilmarsson won’t reveal financial details, such as profit margins. But one of the company’s biggest challenges go- ing forward will be managing the supply chain. “The cost of distributing a re-
frigerated product is very expen- sive and compromises profit margin,” said Adam Borden, managing director of Bradmer Foods, a venture-capital firm that focuses on specialty food busi- nesses. Hilmarsson’s real hurdle is to grow without compromising his values — and his ingredients. There are many examples of small companies with ethics- minded brands that, when posi- tioned for the mass market, lose the authenticity that attracted customers in the first place. Ben & Jerry’s, now part of a Unilever, is the classic example. But there are others, such as Green & Black’s chocolate, now owned by Cadbury, a subsidiary of Kraft, that stay true to their roots. Earli- er this year, Green & Black’s pledged that all its products would obtain fair-trade certifica- tion by the end of 2011. Siggi’s albatross is its price — $2.69 for a six-ounce container at Whole Foods. While skeptics question whether that will play beyond the confines of upscale urban life, so far it hasn’t stopped him. It’s unlikely growing pains will, either.
Jill Priluck is a writer living in New York City.
Hardship 401(k) withdrawals set record in second quarter
More workers also borrowing from their accounts
by David Pitt In the wake of news about a
spike in new applications for un- employment benefits comes an- other potentially troubling sign: A record number of workers made hardship withdrawals from their retirement accounts in the second quarter. What’s more, the number of
workers borrowing from their ac- counts reached a 10-year high,
according to a report issued Fri- day by Fidelity Investments. The trends reflect the financial stress many workers find them- selves in as the economy strug- gles to find sure footing, said Beth McHugh, Fidelity’s vice president of marketing insight. High unemployment and com- panies cutting back on overtime or overall hours have reduced the take-home pay of many workers. “People tend to be taking home
less,” she said. “As a result, the percentage of individuals initiat- ing hardship distributions is one of the things we’re concerned about.” Fidelity administers 17,000 plans, which represents 11 million participants. In the sec-
Forty-five percent of participants who took a hardship withdrawal a year ago took another one this year.
ond quarter, about 62,000 work- ers initiated hardship withdraw- als. That compares with 45,000 in the same period a year earlier. What’s also eye-opening is that 45 percent of participants who took a hardship withdrawal a year ago took another one this year, McHugh said. To be eligible for a 401(k) hard- ship withdrawal, individuals must demonstrate an immediate and heavy financial need, accord- ing to Internal Revenue Service
regulations. Certain medical ex- penses, costs relating to the pur- chase of a primary home, tuition and education expenses, pay- ments to prevent eviction or fore- closure on a primary home, buri- al or funeral expenses, and repair of damage to a primary home meet the IRS definition and are permitted by most 401(k) plans. A key concern is that these
withdrawals are just that, they are not loans. As a result there can be a significant impact on a
person’s overall retirement sav- ings. Workers younger than 591
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pay a 10 percent penalty for an early withdrawal in addition to taxes. The average age of the workers taking hardship withdrawals is between 35 and 55, their peak earning years. It’s also often a time when competing financial challenges emerge, McHugh said. In addition to those taking hardship withdrawals, Fidelity said it’s seen the number of work- ers taking 401(k) loans over the past year grow to 11 percent of to- tal active plan participants from about 9 percent one year prior. The portion of account holders
with a loan outstanding in- creased two full percentage points in the second quarter, to about 22 percent. That figure is the highest in a decade, McHugh said. The average initial loan amount as of the end of the sec- ond quarter was $8,650, which was typically to be repaid in 31
years. The good news in the report was that the average 401(k) ac- count balance as of the end of the second quarter was $61,800, up 15 percent from the same time last year but down from the end of the first quarter of 2010. —Associated Press
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Congress has definitely gone fishing: fishing for votes in November. In the bigger scheme of things, going fishing for votes is probably a good idea. Let them see firsthand that many of their constituents are still out of work, unable to pay their mortgages and living in foreclosure land. Let them hear from the families that have lost loved ones to the seemingly unending wars in Iraq and Afghanistan. A trip home might remind legislators that the health-care legislation they passed will actually help millions of Americans who have no ability to obtain health-care services for their families and that Main Street needs as much attention as Wall Street. Staying in D.C. in August will not change the gridlock that is the likely outcome of political parties more interested in cable TV headlines than lasting change. Perhaps a short visit with angry and frustrated constituents will help our leaders in Washington talk constructively about solutions.
KLMNO
Pablo Eisenberg, a senior fellow at the Georgetown Public Policy Institute, was executive director of the Center for Community Change for 23 years.
The six-week vacation that Congress is taking is not only thoughtless but irresponsible, especially at a time when citizens are out of work and few get more than two weeks’ vacation a year. The leadership of both the House and Senate are once again failing their duty to meet the urgent needs of our recession economy. They should call back the House and Senate for at least three more weeks of work. The president should also cut out his vacation trip to Martha’s Vineyard to show the country that the administration is hard at work to solve our major problems. No wonder the polls reflect dissatisfaction with Congress and the president.
Slade Gorton is a former
U.S. senator and Washington state attorney general.
The failure of Congress to deal with climate change
and immigration, among other challenges, is not due to its being in session too little of the time, but to the nature of those issues and the mood of the country. The president and the overwhelming Democratic majorities in Congress have lost the mandate they were handed two years ago. They lost it because Americans are far more interested in the economy than they are in climate change and immigration, and to the extent that they do care about those two issues, a majority opposes the administration’s positions on them. So the Democratic leadership in Congress does not want to force its members, already in trouble at home, to cast more unpopular votes and has decided they are better off out of Washington. The best solution, of course, would be a Congress in session dealing with private-sector solutions to the recession in a manner appealing to a majority of both parties and perceived by the public to be constructive.
SUNDAY, AUGUST 22, 2010
Katherine Tyler Scott is managing partner of Ki ThoughtBridge, a leadership consultancy. She is a board member of the International Leadership Association.
Leaders need time away to reflect and renew
so they can return to their duties ready to do the hard work required. But the action of Congress is the height of hypocrisy. Many of them have engaged in a politically motivated work stoppage all year. Their work avoidance has not served the best interests of most American people. It is not leadership to automatically be against
something no matter what it is and have nothing substantive to offer in its place. It is not leadership to vote against bipartisan committee legislation because it makes the other party look bad. It is not leadership to block the appointment of positions intended to help the government run more effectively. It is not leadership to make decisions that will affect generations to come in a reactive mode. The diversity of opinion and thought in each party is at risk of devolving into a form of groupthink. Whatever the Democrats were for, the Republicans were against. And it is certainly not leadership when congressional leaders bet on the ignorance or historical amnesia of citizens and fan their frustration and anxiety into intolerance and scapegoating. These are not examples of leadership; they are attempts to manipulate the people.
Excerpts from On Leadership, a Web feature exploring vision and motivation by Steven Pearlstein and Raju Narisetti. To see videos and read the entire panel’s comments, go to
www.washingtonpost.com/leadership.
washingtonpost.com/discussions This week’s business chats
THURSDAY: Color of Money columnist Michelle Singletary, video chat, 11:45 a.m. FRIDAY: Cars columnist Warren Brown, 11 a.m.
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