Capitalism at Its Best

Change the Game™ Podcast

The Future of The World's Supply Chain

Posted by Suranga Herath on Jul 28, 2022 2:23:23 PM
Suranga Herath, Founder and CEO of English Tea Shop, discusses Sri Lanka's most unprecedented economic and social upheaval in its history, and the future of the world's supply chain with social and economic inequalities worldwide. 

 

Episode with guest: Suranga Herath

Founder and CEO of English Tea Shop

(This episode was recorded in July of 2022.)

 

Key Episode Take-Aways:

1. Business owners are struggling to keep up with the rising costs of logistics. Companies are having to come up with innovative ways to absorb costs and still keep their pricing competitive. (click to jump to this topic below) Rates quickly went up, for example, in Europe $1,000, going up to about $10,000, we saw the $2,000 rate to US going up to almost $20,000. What we're seeing now, two years later, is we have to absorb all of that. We did that successfully, because we are our own brand, so we got to really take control of logistics, and it's difficulties including the costs. But imagine us having to battle it out with the best of best in class, we market our products in some of the most sophisticated markets. And now global logistics is still in bits and pieces, vessel callings are months delayed at times, and the costs are seven, eight-fold. And then on top of that, we have the global inflationBut I think the brand has been amazingly blessed, still having fairly competitive pricing. We've had to pass some of these costs to the customers, but the increases have been well below the international inflation rates.

2. Adopting GGOB principles allowed The English Tea Shop to look at problems differently. (click to jump to this topic below)  So back in 2010, we discussed how social implications, especially inequalities, are going to be the key thing for the world that we were stepping into. Our business model was always looking at ways and means in which we could reduce those quality, and our founding purpose was to empower small organic farmers. A couple of years later, while at Harvard, I saw this book The Great Game of Business, and I read it. I took the story out to our leadership team and we adopted the Great Game of Business principles. We realized by that time that solving the farming problem is going to be so much better when our employees really take that burden onto themselves. How do we do that? Because our model says that our entire value chain has to be profitable. So it boils down to profitability, boils down to cash flow, it boils down to balance sheets, right? It's capitalism, but we coined the term ethical capitalism, and we were looking out for solutions. We adopted GGOB at the core of our business, and for our employees we made them think, feel, and act like businesspeople. As all GGOB people are very aware of, we started looking at every problem in a different context.

3. The Great Game of Business operating system and creating shared value has become the future for English Tea Shops. (click to jump to this topic below)  Creating shared value was the model that was most attractive and most fitting to us. A model, which guarantees win relationships and long-term sustainability to three facets of business. How we work with your supplier clusters, how we work internally with your employees to drive productivity, and how you work downstream with your customers. But a simpler way of understanding this is to imagine that your employees are no longer only looking at your profitability, your cash flow your balance sheet, your p&l. Imagine situation, we are in our contest, farming groups 5000 small farmers in Sri Lanka in four clusters 200 plus small, you know, packaging suppliers and service providers for freight and logistics and you know, all sorts of other things, we ensure long term profitability, cash flow and continuity to them as well, that's creating shared value. So taking this concept, to both sides upstream and downstream, and working with them ever so closely to guarantee them sustainable business. This is what creating shared value is about. the model we spoke to them was we told them that the future of the world is all about social and environmental challenges and how best we overcome them together. I said,"The future of the world is global supply chain collaboration, a global collaboration, a new form of business, where the entire value chain has to be profitable, has to have proper cash flows, have to be looking at each other's needs." So that's what Creating Shared Value did to us. And you can imagine when this came across Great Game of Business, if our people understood business better and started working like a business or businesspeople, this becomes ever so easy, because they'll understand other people's businesses and do the activities. That's what happens today. So that I think its co-operating, and I think that's the future as well.

 

Continue scrolling to read the full episode transcription.


Announcer  0:00  

Welcome to the "Change the Game" podcast, where we share stories of open book management and highlight capitalism at its best. Thank you for tuning in to this episode of the "Change the Game" podcast with special guests Suranga Herath, and this episode Suranga talks about the most unprecedented economic and social upheaval in Sri Lanka's history, and how with world's social and economic inequalities, the future of the world's supply chain, let's take into consideration all stakeholders involved. Here's your hosts, rich Armstrong and Steve Baker.

 

Welcome to the "Change the Game" podcast where we are Changing the Game by doing business differently and highlighting stories of capitalism at its best. I'm Steve Baker, and with me is Rich Armstrong, our head coach and co-author of our book get in the game Hello, rich,

 

Rich Armstrong  0:50  

HI Steve, how are you?

 

Steve Baker  0:52  

I'm good. You know, in the past few episodes, we've talked with a lot of different businesses about the panic economy, the schizophrenic marketplace, people in the US are overwhelmed the retrenching either way, whether they're it's for good or for bad. People are feeling stressed. But sometimes we don't know just how good we have it here in the US until you see other people's struggles and what they're facing. What do you think about that?

 

Rich Armstrong  1:20  

I think that's exactly right. You know, sometimes you have to go halfway across the globe to realize that right? 

 

Steve Baker  1:27  

Exactly 

 

Rich Armstrong  1:28  

Right. You know, I had the opportunity to travel to Sri Lanka in February of 2020, to visit an international practitioner of GGOB called English tea shop, and they were celebrating their first step into employee ownership, which, right there is not an easy thing to do in Sri Lanka, the processes the rules, the laws are just not established as they are here in the US, right. But however, you know, English tea had done an amazing job of not only implementing the Great Game practices, but also creating a pretty significant benefit for their employees through employee ownership. Suranga and his team are one of the most committed practitioners that I've really known. And you'll see that in their results, they are definitely committed to improving the quality of life of their people. And after hearing the most recent news, you know, listening to us one day and heard about all the things we're having specifically in Sri Lanka everything from, you know, the pandemic itself, but some serious stuff, state governance, upheaval, you know, food shortages, hyperinflation, transportation, I mean, it was like, you couldn't, you couldn't make up more things that could be going, you know, challenging that small country. And let me put it this way, it's much more challenging than a shortage of paper, like we talked about yesterday with composite, you know so I reached out to her lawyer just to see how things were going and in, it was pretty impressive about the attitude, the positive attitude coming from Sri Lanka, from English, tea, and Suranga, and just all the things that they've been doing to manage these issues. The people have just done an amazing job of stepping up and to all these challenges and keeping their people you know, safe, secure, productive, all those things in in the midst of a lot of challenges. So I'm, I say all that because I'm really excited about Suranga being on the podcast here and being able to share their story because I think it's, although still a lot of challenges there. It's pretty uplifting for all of us that, you know, people can take a lot and if you do it for the right reasons to take care of your people. It's amazing what you can accomplish.

 

Steve Baker  3:49  

That is incredible. I can't wait to get into the conversation. That's the big reason. I'm glad to be talking with our good friend, folks. It's Today's special guest is Suranga Herath, the founder and CEO of English tea shop. Suranga has been in the tea business for decades and founded English tea shop back in 2010 as a way to buck the system of exploitation in the tea industry. He sources organic tea direct from farmers and make sure that the people who grow the tea, get a piece of the pie. And this is really cool, especially in Sri Lanka. He and his team export to 55 different countries, and they've achieved an annual compound annual growth rate of 35% over the last 11 years. He's currently enrolled at Cambridge University in the UK for a sustainability leadership program and learn about Great Game of Business while he was studying at Harvard Business School, very similar to my own story, except for the Cambridge and Harvard stuff. And when we were getting ready for the podcast, I found a great quote that I wanted to share with folks. Suranga is a passionate leader who puts people first and has built an inspirational brand in a crowded industry and that was Jimmy Morris from LDC. So we're gonna get welcome to the podcast. 

 

Suranga Herath  5:11  

Thank you, Steve, Thank you Richard. It's really great to meet you both again. Thank you so much.

 

Steve Baker  5:17  

Absolutely. Well, let's start with what you're dealing with in Sri Lanka if you could give us kind of paint that picture because we Americans complain about dealing with government regulations and issues and all this, but what are you facing there?

 

Suranga Herath  5:31  

Oh, come talk, let's talk about it. I think I'll give you two contexts. One is the broader picture for the country. It's really the Murphy's law here. Everything that can go wrong has gone wrong, and it's still going wrong. If you look at everyday life of people, it's completely you know, it has come today by talk from a context of the current situation, it has completely come to a standstill, there is no foil for transportation, no gas for cooking, there is a serious lack of medicines and essentials for hospitals. And the list goes on. So in our lifetime, and my you know, memory, Sri Lanka, in its 2500 plus years has never gone through a crisis of this proportion, it is really very, very bad. This all comes from, I think it's a band aid crisis, there is no second word about it. COVID really, it was bad, that's true. But to turn from an upper middle-income country, just two years ago, about 30 months ago. Now to this patient of real bankruptcy, we have zero foreign reserves as of now stems from various policy positions, bad policy positions, you know, in relation to exchange rates in relation to interest rates in relation to personal taxes that were removed, in relation to backing the wrong import substitution industries going for blanket import bans, and even banning chemical fertilizers, agriculture almost overnight, all of these things plus more, I think crippled the entire production economy. And that led to, you know, dwindling foreign reserves. Right now sitting with zero foreign reserves, without being able to import are essential. So that's the context for the country. From a business perspective, it's not any different, you know, businesses have to now look into things that we will be thought we would never have to kind of, you know, look into in terms of operations, and, you know, including our own employees, we've had to, you know, resort to all sorts of measures to ensure that not only our employees, but their families, you know, the communities that we work in are all safeguarded in this situation, it has gone down to a level where we run for stocks, not only for our production, but for our people, we have to now transport all of our people from their home front. So I'm talking of 300 of our people dispersed around, you know, the major capital of Sri Lanka. So vehicles coming from all sorts of, you know, all corners of the Capitol. So this was all, you know, had to be all be organized within a very short timeframe, we even runs essential staple foods. And, you know, first docs and you know, things like milk for our families. And then we had to look into mother and child, you know, related issues, we've signed up with the United Nations, the same Children Foundation, the mother and child, our child foundation. So brands from one corner of, you know, having an ESOP, which we thought was like, really cool, and really great, you know, now to, you know, an extreme, which we've never even imagined, we even shifted to $1 pegged salary system for our people, because we can't keep track of the inflation, it's recorded. The official rate is like 60 70%. But in reality, the full costs have tripled. Food costs have doubled. And then, you know, everything else have even gone beyond that. So yeah, it's a pretty bad situation state.

 

Steve Baker  8:58  

It's a perfect storm.

 

Rich Armstrong  9:00  

That's, that's for sure. And in it, just a sit back here and go, Wow, okay, now, where do we start? Which issue can we talk about first? Because I know you've attacked these one at a time. And I've done a great job of doing that. But I'm going to just, I want to start this with the logistics side of things. Because you are a global exporter. So you'd have to be experienced logistics issues that are just unbelievable to manage. So how are you dealing with that? What are the some of the things you've done to keep the operation going?

 

Suranga Herath  9:35  

Yeah, I think two years back when we saw global logistics coming to a, you know, situation, a standstill and you know, lack of containers, vessels and port conditions giving rise to rates, we thought that would be like the biggest problem you'd have to face. It still is a big issue. We saw, you know, we're like 100% export dependent and our markets are a little far away from Sri Lanka. You know, mostly US, Europe, UK, Japan, Australia, nothing really close by in our region. So we saw rates going up from, for example, in the euro to Europe $1,000, or 40, high to the high cube container going up to about $10,000, we saw the $2,000 rate to us going up to almost $20,000. And, you know, we battled through that, I'm sure you would have seen some of these figures, you know, application for the All-Star Award. But what we're seeing now, two years later, is we have to, you know, absorb all of that. And we have, we did that successfully, because we are our own brand, you know, so we got to really take control of logistics, and it's, you know, difficulties including the costs. But imagine us having to battle it out with the best of best in class really, you know, we market our products in some of the most sophisticated markets. And now global logistics is you know, it's still in bits and pieces, vessel callings are months delayed at times, and the costs are seven, eight-fold. And then on top of that, we have the global inflation. And then also the local inflation, which is like, you know, incomparable is incomparable to anything that we had witnessed before. So with all that, we still, you know, functioning, we are still supporting our markets, we are still shipping to those 55 countries, and you're still seeing some growth as well. But I think the brand has been amazingly blessed. And we've been able to compete with, you know, still having fairly competitive pricing, we've had to pass some of these costs to the customers, but the increases haven't been, I think, have been well below the international inflation rates. If you look at those countries like UK, Germany, USA. So we've done pretty well, you know, with all these difficulties,

 

Steve Baker  11:49  

that's incredible. You you've had to be so many different things, right? Flexible, gritty, resilient. And honestly, when I was preparing for the podcast, I can't tell you the impact that these stories that you're telling us are making, because we just don't have any clue as to what that would be like, and yet you're smiling, just so everyone knows that. So what advice do you have for listeners, you know, so I have two questions. One is, how do you face this? Number one? And then secondly, we'll get into how the practice of Great Game might have helped. So first of all, how do you get up in the morning?

 

Suranga Herath  12:31  

I think I should firstly, say that GGOB is at the core of both the questions, but let me take you back in time, when we set up English tea shop in 2010, I think Rich set the foundation to that story. Everyone knows, everyone who knows the brand knows that we found we were founded for social reasons. So way back in 2010, you know, we discussed how social implications especially inequalities are going to be the key thing for the world, for the world that we were stepping into. And then our business model was always looking at ways and means in which we could reduce those quality. So our founding purpose was to empower organic farmers empower small organic farmers a couple of years later, while at Harvard, when I saw this book, Great Game of Business, I read it. And I told you that story, you know, so many times before, you know how soon we kind of, you know, took the story out to our leadership team and adopted the Great Game of Business principles. Because for me, we realized by that time that solving the farming problem is going to be so much more better when our employees are going to really, you know, take that burden onto themselves. And how do we do that? Because our model says that our entire value chain has to be profitable. So it boils down to profitability boils down to cash flow, it boils down to balance sheet, right? It's capitalism, but only thing is I, you know, we found this word, or coined this word, ethical capitalism, and we were looking out for solutions. So we adopted GGOB at the core of our business, at least and, you know, for our employees and made them you know, think feel act like, you know, businesspeople, as all GGOB people are very aware of, and that really saw us looking at every problem in a different context. I'm not saying that I'm smiling every day. It's absolutely tough. If I tell you that things are as comfortable, say, you know, pre-2020, even COVID You know, looking back at COVID It seems like nothing to me, honestly, you know, we had severe difficulties, you know, everything got stopped at a certain point. Rich was with us just before the onset of the first wave. And then, you know, he left two weeks later, the entire country went into a standstill. But I can you know, when you look back at that phase 2020 March, mid-March is when we had to close down for two weeks, because we didn't know The breadth, the depth, the size of COVID. You know, we overreacted. I guess at that time, when I look back at the whole thing, where before COVID became, you know, dangerous, we shut down, you know, the first instance of detecting the first patient. And then April 1 or second, we opened in the 2020. I can tell you to date, we've seen through COVID, and we are in the midst of the most unprecedented economic collapse in Sri Lanka, we had not shut down our factory for a single day, right? 

 

Steve Baker  15:32  

wow

 

Suranga Herath  15:32  

How did we do that? How did we guarantee health and safety of our people because we are a production center, we, you know, run with hands, we don't run with people, and people have to report to work officer shifted to working from home quite easily because we had the setup already done, because we are a global business with offices elsewhere. So we were kind of used to it, we were working on the cloud. So you know, going back and working from home was nothing for our office people, which amounts to 100 people, but the 200 plus people in the factory, you know, we retrained ourselves in terms of transportation, you know, safety at work, you know, wearing PPE and masks, and, you know, people really, you know, showed passion and commitment. So I think, to cut a long story short, this whole business model thing that we speak about so often and so fondly the collaboration of two main theories, which I'm sure you know, you might want to know more of creating shared value, and then GGOB that we kind of connected to it, prepped ourselves. So we always think that we are, we were a business that was founded for a social purpose, it has a purpose thing that makes out makes us, I guess, more resilient than our competition. And we convert, we look at problems and try to convert them into opportunities, and we kind of battle them. And it's just not just the leadership team, I think our entire pool of 300 people, and now we even our suppliers, because we believe in a collaborative party, I think everyone is now in it together. So that really helps us, you know, put a smile in the face and, you know, walk through the crisis and hopefully come out of it relatively unscathed.

 

Rich Armstrong  17:02  

That's, a really good point. It's a subtle point that maybe the listeners would love to learn a little bit more about, well, I take it this way is when we're trying to work into problems like this, especially the logistics problem and production problems, you have to really depend on the relationships you have upstream and downstream. And with the suppliers. And we talked a little bit of that yesterday with another practitioner, you already built that in your framework going in because you had the Great Game of Business, but then you also built what you mentioned as the Creating Shared values framework, can you talk a little bit more about that, and how that may have helped to create those relationships or leverage those relationships in some really challenging times?

 

Suranga Herath  17:47  

Sure, so when we started English tea shop in 2010, and then adopted Creating Shared Value couple of years later, that came first, and then came the Great Game, the thinking was that for us to change the way, you know, the team actually works, especially with the upstream, you know, partners the farmers, in order to uplift them, we realize that we had to work directly with them. And, you know, we went organic, simply because that allows us to, you know, work direct and bypass some of the backward regulations in Sri Lanka, which prohibits, in fact, it promotes an option system or commodity model, which is what we want to bypass and, you know, show that there is there is better ways of building agriculture. And then, you know, when formulating the whole thing, creating shared value, was the model that was most attractive, and most, you know, most fitting to us, because he talks about a model, or a way of, you know, framing activities, you know, coming out with a business framework, which guarantees Win relationships, and long-term sustainability, to three facets of business. One is how we work with your supplier clusters, and then how we work internally with your employees to drive productivity. And also, as Rich said, how you work downstream with your customers. So we started with the first leg, which is like supply clusters, and we wanted to prove that the brand of tomorrow the future brand, the demand will be for purposeful brands, purposeful brands that will be solving, you know, economic issues, social issues, environmental issues. So we want to take those social and environmental boxes in a pretty strong way. And then, you know, CSP really helped us formulate which requires you to, you know, design your activity systems in a way that delivers sustainability to the entire value chain, because this is this is a Great Game of Business audience, I think, in a way that makes it understandable to you the simple way of looking at it. There are many ways of you know, complicated this theory. But a simpler way of understanding this is to imagine that your employees are no longer only looking at your profitability, your cash flow your balance sheet, your p&l. Imagine situation, we are in our contest, farming groups 5000 small farmers in Sri Lanka in four clusters 200 plus small, you know, packaging suppliers and service providers for freight and logistics and you know, all sorts of other things, we ensure long term profitability, cash flow and continuity to them as well, that's creating shared value. So taking this concept, a leg, you know, beyond, you know, to both sides upstream downstream, and working with them ever so closely to guarantee them sustainable business. This is what creating shared value is about. In the marketplace, it's similar. But I think the supplier side is what is more applicable to India's tea shop. And that's exactly what we had done. And part of the success story of us surviving COVID. And then the economic collapse, I think, a large part of it can be attributed to the supportive nature in which our suppliers, you know, helped us because they've seen how passionate we were to build the Creating Shared Value activity system with them over 12 years, right. And then comes COVID. And then this economic collapse, the model we spoke to them was we told them that the future of the world is all about, you know, social and environmental challenges and how best we overcome them together. And I particularly remember this quote, I said, the future of the world is global supply chain collaboration, a global collaboration, a new form of business, where the entire value chain has to be profitable, has to have proper cash flows have to be, you know, looking at each other's needs. So that's what Creating Shared Value did to us. And you can imagine when this came across Great Game of Business, you know, that, um, you know, if my point was If My people, if our people understood business better and started working, like, we started working like a business or businesspeople, this becomes you ever so easy, because they'll understand other people's businesses and do the activities. And, you know, that's what happens today. So that I think its co-operating. And I think that's the future as well.

 

Rich Armstrong  21:59  

That's great. How could somebody learn more about Creating Shared Value? What Where do they find more information than

 

Suranga Herath  22:07  

I think there are many case studies and from uh, I think this this, again, is very American model, you know, closer to you guys then to me, I was lucky, you know, I went to Harvard. And you know, this has, you know, experience and I did a one-to-one sort of course, not one to one, but of course, from Michael Porter and Mark Kramer on CSP, but creating shared value, most of the case studies are very American. Now, some of the creating shared value pairs who have turned social issues into business opportunities, a large American businesses like Walmart, or global furniture business, like IKEA, if you look at them, their entire business models are related to, you know, serving underserved people, whether it's in the Walmart context, right, whether in the way IKEA modulates there, you know, offerings to people with low budgets, low small spaces, and they don't go out of that, right. And they've created an entire conglomerate, or a massive, you know, one of the world's largest furniture business out of their single thing. And a case study that appears to be mostly is an Ikea business, IKEA vision business, which developed a set of eyeglasses to be sold for under $1. It's about $1. And that target market was people earning less than $5. Now, which large business would look at a marketplace. So they realize that there are almost 2 billion people with vision impairments and out of them. At that time, when they started the business, a good 600 700 billion people could do with a simple over the counter solution with a scroll where you could turn a dial and then get your eyesight so kids could read people could drive well, they could, you know, read a newspaper. So something like that came after 700 years of discovering the original, you know, solution for vision impairment. So imagine that. So this is creating shared value the marketplace, but then you have players like English tea shop, who's converted, you know, opportunities in in farms in agriculture, and created brands to solve, you know, needs of people. So the concept is available as creating shared value. You could you know, Google, and you'd see Michel Porter's and Mark Kramer's original writings on that. That's probably the best starting point and then some case studies, sundial brands, again in the US, now owned by Unilever. So you have the large ones, you have the medium size, and also small brands as example and case studies probably is the best way to learn about it. Yeah.

 

Rich Armstrong  24:45  

Great, thank you. Thank you for that. 

 

Steve Baker  24:47  

That's a big idea to take the social and the capitalism and put it together. I like how you've made that your foundation. And then you took it one step further, right. You even introduced employee-owned ship, so they actually have a financial stake in the business. I'm curious if you could talk about that structure, because I know that with everything that's in upheaval now, I'm sure it's changing. And let's start with the structure. How does employee ownership work in Sri Lanka, and what has happened to it recently.

 

Suranga Herath  25:20  

So in our context, we adopted Great Game of Business in 2015, called it the big game because we use creating shared value and integrate them together. And we gave it, you know, a little homely sort of name. And then it took us like five years, and I'm still glad, I think that's the last time he and I met, he was down here in Sri Lanka, when we made that award symbolically at our global distributor conference, when we had people from all over the world coming in and spending about a week with us. So we, that five years of maturity of open book management practices, and you know, playing the game, the minigames, the budgeting, the high modern planning, it took to, you know, took us to that position of being able to transfer 15% of our equity, to a trust. And that was also a pretty unique trust. Because in our context, this is, again, not very common problem in Sri Lankan, or even from a South Asian context, to have ESOP's. So Ernst and Young, you know, helped us put together a very unique trust, and there was no, you know, cost to the employees, yet the shares were transferred, you know, are vested immediately, which is also quite uncommon. And then people start receiving dividends almost immediately, there is a short-term benefit program. And then, of course, in the long run, it is really the shares that you take out. But if you leave within a certain period, you only get the appreciation of the net book value. So that's to secure, you know, ourselves, and also to make sure that there is no real because our concern was not about people who, you know, kind of stay for short periods, because they have other things to, you know, bank on the bonus programs, the profit sharing programs, and even the dividends that, you know, they're received while they're there. And then when they leave, we pay the net book value appreciation, you know, during that tenure, and then the shares go back the trust and gets, you know, distributed again, during COVID. I think this just five months ago, we doubled our ESOP again, on the same terms, and now what happened was the original 15% was given on a you know, it was a little learning for us, it was given to a selected, you know, I think it was hierarchical. So it was only about 80 people out of our 300 people. And so it was beyond with the shop floor was not included. That is what we did. So we had three criteria’s to have or what just one year service that's like, you know, the simplest thing it could get, I guess, and then the rank, and then obviously, the two years of performance, you know, KPI average. So those three, we enhanced it in December 2020, double the ESOP to 30%, and then open it up to the entire company. So now we have 220 people who are ESOP members. And obviously, we are looking at expanding it further. So it's been just within one year within COVID, during the economic collapse, is like we did, but this was already this was the plan anyway, so we didn't stop.

 

Steve Baker  28:15  

We were able to follow up question. I know that you mentioned in the in the earlier part of the podcast that that Richard was there with you for a week, and two weeks after his departure is when everything went south? is he responsible for the destruction?

 

Suranga Herath  28:32  

I don't know it, you know, to some extent, because I think there were two Americans if I remember I said it must be one of them.

 

Steve Baker  28:40  

Must have been the other one. It must have been the other.

 

Suranga Herath  28:43  

It must have been the other one

 

Rich Armstrong  28:46  

Well, hey, can you tell people that how they can learn more about English teashop?

 

Suranga Herath  28:52  

Okay, this is going to be a difficult question because I don't think we're really good in talking the walk. We have never been so our websites have been fairly poor sustainability pack reports could have been better. But we launched a brand-new website just couple of months back. And I think that's more story focused, impact focused and purpose focused values and beliefs focus than non-product. So I think right now the best asset for someone who doesn't know the brand is to get on our website and check on it. There is our sustainability report as well. But I do think we can do far better, and we've never been good in a you know, that side of things, the communications things and I don't think that's a need also, because, you know, we boast about the fact that we don't have to talk the story too much. And then you know, naturally doing it will you know, bring us the kind of growth the following the blessings you know, our you put it I think we believe in that natural process. But yes, I think the website is probably the best way to find that little detail about us and then you can reach out to us as well because we are a people, you know, a bunch of people who are ever so willing to spend time on you know, trainings on teachings on stockings. And you know, so we have full of people who would love to talk to even a simple question, you know, or even a complex one about the business model, guys, you know, we are open book, right? So you guys have taught us to be very open. So we're very open with anything we do.

 

Rich Armstrong  30:16  

Is there? What ways can we get access to your product? 

 

Suranga Herath  30:23  

Yeah, so we are very, I would love to say that we are very spread in us, which is not the case. Our Prime markets are UK, EU, Japan, Australia, you know, that part of the world. I trade the world as two parts, if you pardon me for saying this, US and rest of the world. And we were born, in fact, for need, or an opportunity for the US, right? That was in 2010. So we match that social purpose to an opportunity in us but then a couple of years later, because we were so close to UK, we had done a lot of work, we went and established headquarters there, we realized that there are two ways of building an organic brand in our space. You conquer US if I may use that word. And then you know, get to a certain state, get to the rest of the world. Because it's a world on its own, the US especially from a retail perspective, your retail market is absolutely different. So we had to make a choice. We selected Europe, UK, Japan, Aussie, which had a lot of similarities, a lot of commonalities, and we develop the brand, they are nurtured, we grew it to, you know, a fairly, you know, good state. And now we're looking at US coming back to US after so many years, with a few places in your natural food markets, like Central markets, but we are not widely available. We are on amazon.com You know, obviously, but again, not in a big way. So we are priming up, we are getting ready to come to US, you know, got delayed due to the issues of the last three years. But we will be there but if you are in UK if you're in France and Germany, we are in this you know, we are we are a known brand in the specialty go man organic channels and also online, check us out on you know, you, you check for English tea shop from wherever you are, you should get some sort of a lead capture. They're not that large brand. We are a niche specialty brand, but we love to be a no exclusive in our availability as well. So we're not like a supermarket brand. But you still accessible if you know, search for us.

 

Rich Armstrong  32:24  

Fall back plan Steve and get into the tea distribution business sometimes.

 

Steve Baker  32:31  

open to that. 

 

Suranga Herath  32:34  

Well, maybe it's another practitioner who wants to pick up and run.

 

Steve Baker  32:41  

So I wanted to ask one more question about your personal, like mode every day, like help our listeners understand like when Suranga gets up in the morning, how do you up regulate? Or how do you self-tune to say, okay, everybody's looking at me, they're waiting to see as a leader if I'm gonna bail, or if I'm gonna crumble or if I'm gonna stand strong, like how do you tune yourself up to be the leader that you are?

 

Suranga Herath  33:12  

I think this is an easy question to answer, at least until the beginning of 2021. Right? I had that I think natural ability to smile and the crisis I had faced, and you know, we have faced as leadership teams and as a company as a business we're nothing compared to what we're facing now. So if I tell you that I'm all smiles and you know, all positive every day, in this current context, at least the last year or so I'll be lying. And you know, there is no second thought of it, it's hard. Sometimes I wake up and I you know, want to go back to sleep again, right? But then I know I don't even use my own vehicles and drivers to go to work now these days I use staff transportation because we shifted to providing transportation to everyone and I want to also join that and that also keeps me going you know simple things like that. And I don't travel internationally as much as I did rich would remember I would they be traveling couple of times a month and very, you know long distances, I've cut down on all of that COVID kind of characters reset you know those things so COVID was in a in a way you know a blessing in disguise to reset ourselves to look at our productivity and look at our personal you know behaviors and be we know change quite a lot of things I spend a lot of time with family which must be healthy me as well. But when I get into that stuff transportation vehicle in the morning, I don't have to force myself to smile it's not like walking into the office straight up I know you know, but plenty people who you know, wait for me and I'm like the last or the one before the last pickup. And then you know we start talking chatting from that point onwards and obviously 99% the time it's the problem fully is no longer there. Foil is not coming you know today, the news is the next now listen to this. The next foil consignment is coming to Sri Lanka on the 22nd of July we are on What the 29th of June. So when you hear a news, I heard that just two hours ago, and then I had to prep for this podcast to be positive while talking is itself you can imagine the kind of crisis that I'm facing, it's not just a business issue, it's a whole, you know, community or country, whole thing, you know, it's collapsing, and I won't have worked for myself, right, we only have a stock of diesel, which we directly import through the full, you know, one of the private oil corporations for the for the production business, and then all of our waiters or petrol. So, you know, we have, you know, nightmarish times these days. So that's on one hand, and then all the other issues, the global logistics, the inflation's, you know, lack of other things. And, you know, when you look into your people's eyes, the problems they go through is unimaginable, you know, some of the children have not gone to school in two, three years, right, some of them have no ways to cook. So we went to the extent of providing them induction and infrared cookers to 300 people just two months ago, because I said, this gas problem is not going to get solved, let's go solar, let's go electric. And let's be, you know, self-sufficient. So we had to do crazy things, we still look at the PnL, we still look at the balance sheet, we still look at the cash flows, but the compromises have been made, because we know the gains out of this will come in terms of profits, because we need that. Because it's not, it's not a complete charity turn run like that, then I'll have to shut down in six months. So how do we really, you know, turn around this crisis? I think this crisis is an opportunity, I guess, in a way, wrapped in a problem. So we are unwrapping the problem every morning, and then trying to smile through these difficulties. You know, sometimes when I start talking, to be very honest, tears come almost naturally, it's never been like that. I've never been that kind of a person. It's that hard. But I think I know that there is a community with me fighting together 300 people and our families, and all wishing for the best and working together. So the amount of things we've achieved the last two years, I guess, is unimaginable. I can't even script it properly, the amount of things we've done, and we will continue fighting. But, you know, a question is what's your breaking point? And I don't know, my only thing is, I always believe that as long as we are one community and fighting this together, that breaking point seems to be you know, drawing a little further. So which is which is good for us. And that helps us smile in between and you know, be positive?

 

Steve Baker  37:19  

Well, I gotta say this is I mean, it's blown me away, man. 

 

Suranga Herath  37:25  

Thank you

 

Steve Baker  37:26  

Yeah, for sure. We, you know, certainly we you know, that we always like to ask, what is the one question that we should be asking you that we didn't think of?

 

Suranga Herath  37:37  

I think that one comment I made probably is, you know, it's the thing, you know, what's your breaking point? And what are you? What is your line? There has to be a line, right, in this world when things collapse around you. So the question is, I think whether we will have the resilience, the positivity and the optimism, and I have to tell you, I don't know, but we're doing everything possible, to push the breaking point further by working together. And Great Game, to be honest, has been the cornerstone, you know, you can, you know, I invite you all to come down this by this crisis. If you come down, we look after you, anyone, basically. And we will show you how the game, the knowledge, financial literacy, thinking like businesspeople, you know, thinking feeling acting like businesspeople has really helped us read these situations better. And, you know, every one of our 300 people are making decisions. And I don't think there is another company, at least in this part of the world. Who can boast that, you know, I said this, I think, last time to reach as well, when we spoke, it's like working with 300 CEOs. So it's not that the entire burden is on me, right? It's shared leadership. And then we have we have people taking the front seat back seat, you know, changing times, sometimes I go to the back, and when I see someone taking the ration and running it, I take a backseat. And then you know, we switch position. So it's a very dynamic leadership patient. But leadership framework, I think, largely supported by the Great Game, and that's something everyone would say no, in our context.

 

Steve Baker  39:01  

That's awesome. Well, so I kind of take notes through the show and kind of consolidate the thoughts and that's sort of the I don't know how you said so many important things. I don't know if I did a good job. So can I review it with you here and you can tell me if I got it wrong. And these are just the things that I happen to grab. So in the most unprecedented economic and social upheaval in history, English tea has never stopped operating. And the foundation of creating shared value and Great Game of Business created that that strong foundation that allowed you to keep going, you were you founded the whole enterprise on a social purpose to empower small organic farmers and you've stuck with that. You talking about creating shared value, or CSV, which is about ensuring long term sustainable business for all the parties involved, and that relationships both upstream and downstream. Dream are essential to success. So your advice was to bake that into your business model. You call CSV and Great Game together the Big Game. So you've got shared, creating shared value and high involvement planning, and then playing the game, that you said that's been essential to being resilient in the face of a tough market and life situations. I love that you said it's like working with 300 CEOs instead of 300 employees. And it's really cool. You've created short term rewards like mini games, bonus plans, even dividends from the employee ownership, as well as the long-term rewards of employee ownership and a career path. And I think what you're showing now is how you've tied those together, because the only way we get through this is together, and I think that'll, that will make you stronger. In the end. You also said something about the future of the world, and it was around the global supply chain. I didn't get that. Could you please repeat that phrase?

 

Suranga Herath  40:59  

Yeah, Steve. So my point way back in 2010, we thought that the world is going to head into a critical state, not only due to the climate crisis, but more so due to growing social inequalities, right. So if, you know, if you look at COVID, for example, during COVID, these inequalities have almost doubled. But 10% of the world's income earners own 52% of the world's balance sheet. The bottom half of the population only earns 8.5% of the world's balance sheet. That's so bad. For example, if you look at South Africa, in income inequalities are far worse than during Apartheid times. Right. That's just what you know, COVID and the and the recent economic crisis had delivered. So our thinking was that when we step into a world of such unknown, you know, risks, especially stemming from social inequalities, our business models have to take into account that account of that, be it in how we work with suppliers, or like you guys preach as to how you work with employees and turn them into businesspeople, right, or in the way we work with customers. So my principle is, why not look at all three, and convert these crisis situations, the risks into opportunities, through activities, systems, work with local pastors that needs support, and, you know, build those ethical foundations into activity systems and, you know, convert your businesses into a Great Game, or, you know, open book, or business or business people and then look into customers, with a with you know, with a lot more concerned about the social crisis that they're going to stem into? Are you focusing on the 10 person that owns 50% of the wealth only? Or are you going to build business models, for the bottom half of the world that only owed eight and a half percent of the world's wealth, and create, you know, you can, you can be profitable, and you can be profitable by distributing that profit across those value chains. So this is the world I think that we are stepping into, and it has come now it's, it's right in front of us. It's beyond us, I think we need to now catch up with that. And then, you know, pre create those business partners.

 

Steve Baker  43:05  

I like the way you envision the future. And you're someone who's actually doing it. So the rest of my notes are around, you know, kind of how we wrap things up, even in the face of the perfect storm, pandemic food shortages, fuel shortages, government class collapse, cost, explosion, hyperinflation, and more. You have to choose your response to the circumstances. And this is me just interpreting the conversation. Remember that people are looking to you for leadership, because they can't look to the government they can't look to, they can't. So it's your business leaders guys are looking to you for it. And, and I really liked the story of how you traveled daily, daily with your team, it increases communication, camaraderie, a feeling of team and community working together to continue fighting and you said that as long as we were fighting together, the breaking point can be pushed further down the road. Okay, folks, you can Yeah, wonderful. Really moving today, Suranga thank you so much, folks. You can learn more about English tea and what they do and their purpose and mission at ETSTeas.co.uk. So English teashopteas.co.uk And we'll put it in the show notes as well. Man Suranga thank you so much for being here. We always appreciate you and what you're doing even now more than ever.

 

Suranga Herath  44:36  

Thank you. Thanks to both of you. It's been always a pleasure. talking to Great Game people especially to you, Steve and Rich. Thank you.

 

Rich Armstrong  44:45  

Thank you so much.

 

Steve Baker  44:46  

Rich, thank you for going to Sri Lanka and you know helping to inspire more folks. I'm sorry you broke the country. Let's the books let's keep the conversation You're going send us your questions, your stories, your best practices, your ideas, your challenges and your victories because that is capitalism at its best. Thanks for joining us, and we'll see you next time.

 

Announcer  45:12  

The "Change the Game" podcast is produced by the Great Game of Business. To learn more, visit greatgame.com

Topics: Employee Ownership, Sustainable Business, capitalism, economic crisis, Pandemic, inflation, International Business

About The Podcast

Podcast Banner

Hosted by Rich Armstrong and Steve Baker the Change the Game podcast highlights true life stories of organizations influencing positive change by doing business differently. They’re teaching people how business works and closing the gap between the haves and have-nots. It’s capitalism at its best. Inside each episode, you’ll discover stories of entrepreneurs who are Changing the Game.

Change the Game Podcast Trailer

GGOB_PodcastPageDesign_Ver2

Subscribe to Get notified about new episodes!