Turning a social ethos into a competitive advantage
Simon Erlanger, managing Director, Isle of Harris Distillers
Winner of IoD Scotland Director of the Year - Medium Size Businesses
When the Purpose of your organisation is to support the economic regeneration of a remote Hebridean island, how does this fit with the commercial imperatives of a private enterprise? How is it compatible with the need to compete effectively in a craft gin category with over 50 Scottish competitors, not to mention the hundreds from elsewhere?
The profit motive is a driver of efficiency. Profitable businesses attract more capital to pursue their growth ambitions. A raison d’etre that aims to maximise employment should naturally be at odds with this. The challenge for Isle of Harris Distillers was to turn this constraint into a competitive advantage and therefore an asset rather than a liability.
The starting point was the ‘Brand Blueprint’ we established even before the funds were raised to build the distillery. A simple summary of our Purpose and Values, the Brand Blueprint provided the catalyst for a range of ideas which would translate into superior profit margins needed to cover the high costs associated with our remote location and our ethos.
An early decision was to employ local staff wherever possible. Our team of distillers are all islanders with no prior industry experience, requiring extensive training and ongoing consultant support. Their lack of experience is more than compensated by a rare commitment and pride. Our decision to carry out all possible operations on the Isle of Harris has resulted in much higher costs than a mainland operation, in both manpower and logistics. We have turned these costly constraints into competitive advantage by emphasising our true island provenance and our social mission in our storytelling. The combination of an inspiring story and a superior product beautifully presented, have enabled us to justify a super-premium price from the outset.
Our value of ‘Nurturing Belonging’ led us to re-consider our route to market and resulted in a ‘direct to consumer’ model of making our gin exclusively available online, an industry first. The cachet of a product not available in retail has further supported our premium price. Bypassing the traditional supply chain has additionally produced superior margins and shipping our gin direct, bottle by bottle, has enabled us to employ more local people in the operation.
With no ‘exit plan’ and a perspective reaching out for generations, it is imperative that growth is sustainable. Doing the right thing; not just for now but for the future. ‘Life takes Time’ is another of our values.
Two years into our journey, with initial targets surpassed (both profits and staff numbers), the question of scalability of the model starts to come to the fore. Scalability for us will always be relative, given the constraints of our island location. Scaling the business, like everything else, must be done in sympathy with the purpose and values. We will learn and adapt - seeking the sweet spot of sustainable, profitable growth.
In a few years from now, our single malt will come of age. Our storytelling today, our products and our way of working, are laying the groundwork for its arrival.
The glue that binds all the above and that we hope will prove to be the key to longevity, is the sense of belonging we nurture in all of our stakeholders. We choose partners who are inspired by our project - it’s not simply a commercial arrangement. By telling our story to everyone we come across, by keeping it honest, straight and true (another value), we surround ourselves with people who want to be part of the adventure. I believe that this combination of head and heart will be our ultimate competitive advantage.