The Premium Collective Case Study


The Premium Collective Cola

The Premium Collective Cola

 

Can an organization satisfy the needs of all its stakeholders, while keeping an own identity and growing constantly?

 

Making everyone happy

For many organizations it is already difficult to just satisfy their own employees and many struggle to keep their customers happy.

How can a network of around 1700 partners, who are not part of the organization but are affected by the actions and decisions of that organization, then be satisfied? How is that management possible with a core team of only twelve people in the organization, where most have not be trained for the tasks they are currently doing, but are doing it because they simply want to? How is such a corporation and organization possible without ever having had a single written contract for the past 15 years (with the exception of opening a bank account and having an insurance, which legally requires a written contract)? How is all that possible while at the same time also rewriting the rules of how to do business?

 

The Premium Collective

When Uwe Lübbermann’s favorite cola brand changed their recipe without feeling the need to inform their consumers, he did not feel treated on eye-level. As a result he set up an online community where he gathered other people to make them aware of what happened. His initial request was to bring back the old recipe, but even with a community of 700 people the brand was unwilling to listen to their customers. Instead Uwe got a hint out of the community that it would not be too expensive to fund the production of his own cola. Delighted by the idea he was facing a couple of new, serious questions however. For example, who would produce it or how to work together?

Uwe was not willing to make decisions over other people’s life. Instead he asked what others needed. This often resulted in lengthy discussions, but in the end a mutual understanding was reached and a solution was found that everyone could agree on. The production of the first Premium Cola started soon afterwards.

 

Consensus democracy

Considering everybody’s needs

The process the Premium Collective applied was later termed consensus democracy. Everybody who is affected by the actions of the Premium Collective has the opportunity to discuss how things should be handled. With the purchase of one bottle of cola, having seen a person from the network in real life and simply stating their real name, to have some sort of trust, consumers can get access to an online platform where most of the organizational data and current ways of operating are made transparent.

Not everyone takes part in the discussion, but considering the needs of the persons involved before agreeing on a solution creates smarter and more social decisions. The process might be longer in the beginning compared to one person making a decision and telling everyone what to do, but over time the process is actually faster and in addition the result is more stable since it is backed by the diverse people who it has an effect on.

 

Using the intelligence of the group

Consensus democracy offers the Premium Collective the opportunity to tap into the intelligence of the group and to work to their best knowledge till external conditions change. Then everyone can demand renegotiations, which makes the organization highly agile. In 15 years there were only three situations where no consensus decision could be reached. Two involved branding issues, which are depending on personal preferences, and one involved the handling of a deficient production. In times of crisis, however, it is necessary to react quickly and trust the decisions of a leader or management team. The Premium Collective has two precautions, where quick decisions can be made without finding consensus first. One is for legal situations, when products need to be produced and delivered, and the second is for discriminative issues. Trust towards the leadership team is developed, by them using these precautions as less as possible.

 

Challenging the rules of how to do business

Anti-bulk discount

The Premium Collective is not following the mainstream rules of business but is building a business system from the bottom and how it should be by starting from the customer perspective and taking into account what commercial partners need. Probably the most uncommon method is the offering of an anti-bulk discount to smaller wholesalers. Usually big wholesalers get discounts when they purchase large volumes at once. But since they are already large they can easily make use of economy of scale for example by having larger trucks and being able to transport more crates in one delivery. This gives them an advantage over smaller wholesalers, which would be further increased with offering a volume discount. The anti-bulk discount not only supports smaller wholesalers with lower costs, but it also creates a more stable network of customers for the Premium Collective. Since the number of smaller customers the organization is dependent on increases, the whole system becomes more resilient. In addition this method is in line with the core belief of the Premium Collective to act based on equality of people and that everybody therefore should have equal opportunities.

 

Anti-bulk discount from the Premium Collective

Anti-bulk discount (costs on vertical axis, amount on the horizontal axis.

For lower amounts to transport the Premium Collective reduces the Cola price for wholesalers. )

 

Transparency

When giving everyone the chance to take part in discussions of the organization is run then transparency becomes a prerequisite. It allows everybody to have the same information.

Nevertheless, there is a difference between transparency and privacy. Personal data are never made transparent. Neither is information that competitors with bad intentions could use against the Premium Collective, nor Grey zone information like producers that want to keep batches with the double amount of caffeine for themselves. The law requires making transparent what amount of caffeine a drink contains. By talking to the people involved a consensus decision could also be found for that challenge. Last but not least, the time for explaining information to members is also not made available, since that would harm the equality principle.

Besides these four restrictions every other information is made transparent on the above mentioned online platform. Members get access to for example the cost structure of where the money for one bottle is going. It contains common costs for ingredients, production, administration, wholesalers, dealers and gastronomes (from bottom to top).

 

Cost distribution per bottle for the Premium Collective

Cost distribution per bottle

 

No unwanted advertising

It is surprising to find no costs for advertising in the cost structure. The Premium Collective sees advertising as unwanted communication that customers have to pay for. Facing the bombardment of advertising and click-baits these days it seems reasonable to let good work speak for itself and to invest the money in other areas. Word-of-mouth is still the best advertisement for a product, even though it might take longer than classic push advertisement. Or to give it actually to the people who are involved in making and delivering the product.

 

No profit, but fair pay

Besides a small percentage (1 cent per bottle) for times of crisis all money is equally distributed. There is no profit made. Making a profit is actually a sign of having done a bad job in the past. Either customers have been charged too much or producers have been paid too less. That is also why everyone is paid the same amount (20 € per hour) at the Premium Collective. It does not matter if it is the truck driver or the accounting person. Everybody’s job is important and faces different challenges that can hardly be compared. The only exceptions for people to earn more are for parents, which have higher costs due to their children, people with disabilities and people who do not work from home and thus need to rent a desk. It is currently discussed to include people who take care of their parents as well in the higher earner group.

 

Collaboration with competition

The Premium Collective also collaborates with competitors, because in the end competition is just costly. Mutual benefits could be achieved by sharing own knowledge and best practices instead of fighting a price war, where both parties are worse off in the end. A concept called “open franchise” has been introduced for lemonade and mate drinks. In this concept the Premium Collective brings in their expertise, established organizational as well as supply system to help new franchise organizations with own branding, which are run then as a separate business. Other companies try to adapt the system for example in Denmark, since the Premium Collective is not delivering to other countries besides the German-speaking ones due to the ecological footprint. Again the Premium collective is willing to help; all without signing any contracts.

 

Long-term success story

Relationship building takes time

It took Uwe eight and a half years to make a living of the Premium Collective, but only because he was the last one to be paid. Before he made sure that everybody got a fair share first. This trust building behavior might be the reason why no law suit was needed in 15 years of business activity with no written contracts. Or why only two percent of the now around 1700 partners resign. In 2016 1.5 million bottles have been sold and the Premium Collective now not only sells cola, but also beer and mate lemonade as well as elderflower lemonade. The number of sales is constantly growing at ten percent per year. These numbers could actually be higher, the demand is there, but again in an untypical way the Premium Collective decided to put a cap on its maximum annual growth rate. Growing too quickly would actually threat the stability of the organizational network. The organization would not be able to pay for the next production batch, since there are no huge savings for such quick moves. When the growth was too quick the organization could not pay its producers.  When wholesalers heard about the issue they offered to pay earlier and stated that “we have a problem”.

 

Conclusion

Satisfying the needs of all stakeholders is possible as the Premium Collective has shown. At the same time it has built a unique brand image that is not advertised though. This humble attitude and long-term focus ensures the organization a constant growth every year. Taking into account the concerns of everyone involved might be time-consuming in the beginning, but the result is a stable and loyal network of people who are willing to help out when times are though. Using the knowledge of the collective has created features like the use of recycled paper or vegan glue for the labels. The Premium Collective is currently trying to find a way to re-use their crown seals. One might wonder what will be next.

 

If you have an idea on how to re-use crown seals or want to know more about the work of the Premium Collective you can access their (German) website at: http://www.premium-cola.de/

 


What is the most uncommon business activity from the Premium Collective for you?

 


 

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About businesshumanizer

My name is Jens and I envision a future where everybody is appreciated for their individual talents. That is why I encourage humans to find and follow their purpose in life and explore how that could influence the working environment of businesses.

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