Great Harvest's Recipe for Growth

How has Great Harvest Bread Co. opened 130 bakeries in 34 states? Freedom, community, and ideas: "We're a brand company, but we're also a university. We're creating a community of learning."

It's one of the biggest challenges facing companies with big plans for growth: How do you roll out a new idea without making it seem bland in the process? How do you get scale without smothering innovation?

Great Harvest Bread Co. has a recipe for innovation-driven growth. Founders Pete and Laura Wakeman opened their first bakery in 1976, in Great Falls, Montana. Great Harvest now has 130 bakeries in 34 states and generates annual sales of more than $60 million. Its goal is to have 500 stores by 2005. How has it grown so fast? By selling franchises. But unlike most franchises, Great Harvest doesn't insist on standardized procedures or impose top-down regulations. Instead, it promotes localized innovation and encourages fast learning.

"We think of this as an intellectual-property business," says Tom McMakin, 37, Great Harvest's chief operating officer. "We're a bread company, but we're also a university. We're creating a community of learning. A network of equal participants doing similar things will generate lots of new ideas — and produce a big competitive advantage for the whole company."

The first principle of growth at Great Harvest is that expansion comes from experimentation. Its mission statement opens with a call to "Be loose and have fun." When new owners sign on as franchisees, they don't have to wade through a thick document of regulations. Although there is an operating manual that details best practices, owners run their bakeries as they see fit — on just one condition: that they share what they learn along the way with other owners in the Great Harvest system.

"We're a freedom-based franchise," McMakin says. "Each store has a mom-and-pop feel. But in our stores, mom and pop know what they're doing — because they stand on the shoulders of more than 100 other people doing the same thing."

Hence the second principle of growth: Owners make the best teachers. When Great Harvest opens a bakery, the new owners travel to company headquarters in Dillon, Montana for a week-long training session on how to bake whole-wheat bread — Great Harvest's (ahem) bread and butter — and on how to run a small business. Staffers teach many of those sessions. But an experienced owner is always on hand to provide examples and to act as a role model. Then comes the real education: The new owners visit two up-and-running franchises in different parts of the country.

"Experience is the mother of expertise," says McMakin. "New owners learn more from their peers than they do from bureaucrats. I don't own a bakery. I sit at a desk."

Zealie Van Raalte, 50, and his wife, Susan, 49, are a case in point. Before they opened their bakery in Larchmont, New York, Zealie Van Raalte visited stores in Birmingham, Michigan and Alexandria, Virginia. "I thought I knew everything about running a bakery after we visited Birmingham," he says. "But in Alexandria, they don't do things the same way."

Great Harvest wants its owners to keep learning. That's why new stores get a checkup visit from the owner of an established store within six months of opening. The company covers the visitor's travel expenses. It also pays for half of the expenses whenever one established owner visits another. "We spend most of our money on connecting owners, not on trying to generate ideas in Dillon," McMakin says. "There's just something magical about two owners — two people who do the same thing — standing next to each other, talking and learning: Here's someone looking for knowledge; here's someone sharing it at the right moment."

Great Harvest uses technology too. Last spring, it created a company-wide intranet to serve as a repository for recipes and management tips, as well as ideas about decorations, promotions, and marketing. About 80% of Great Harvest's owners communicate with one another regularly via email.

Van Raalte says this interaction among owners is what keeps his store growing and changing: "We knew we wanted to run a bakery, but we didn't know how. We stay in touch with the owners we met in Dillon and with the people we've visited. They're our best source for ideas."

You can visit Great Harvest Bread Co. on the Web (www.greatharvest.com).

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