The coffee industry, a model of balance between pragmatism and idealism

How can a company solve societal problems while remaining economically viable? Must it constantly navigate between idealism and pragmatism? These two forces are often perceived as opposites, but they are also complementary. They therefore form a paradox. To provide some answers, professors from NEOMA, EDHEC and the University of Tampa studied the coffee industry (2), an example of a successful combination of idealism and pragmatism.

The coffee industry has faced many obstacles, including declines in demand (particularly when it was considered to be just a poor-quality psychoactive product) and environmental and social challenges (fair remuneration for producers, unsustainable agriculture, etc.). And yet it is thriving. This is evidenced by its presence around the world and its omnipresence in different environments, whether in homes, businesses or shops dedicated to it. This is not the case with tea, for example, which is not as prevalent in businesses, or with soft drinks, which do not have shops or venues dedicated to them like cafés, etc.

The researchers drew three lessons from this that can be applied today to all sectors, but particularly to the social entrepreneurship sector.

Idealism as a compass, pragmatism for survival

The coffee industry has managed to remain pragmatic, i.e. focus on volume and profits and treat coffee as a simple psychoactive stimulant, while also being idealistic, i.e. focusing on quality, promoting coffee as a noble product and, more generally, taking ethical, social and environmental ideals into account.

Social enterprises must also balance these two forces in order to survive and have a real impact. They are often born out of a strong ideal, a commitment to transform a social or environmental situation. This ideal is their compass, guiding their long-term vision and giving meaning to their actions. Pragmatism allows them to take into account immediate constraints, whether economic, operational or regulatory.

In practical terms, this may involve compromises on the methods used, financing choices or partnerships that enable the enterprise to stay afloat. For example, a social enterprise specialising in the professional integration of people who are distant from the labour market (idealism) may, in order to remain viable, set high productivity targets, which may limit the time spent on training its employees (pragmatism).

Similarly, a social farm that hires people in rehabilitation to grow organic produce (idealism) may be forced to set high prices (pragmatism), which limits its market to more affluent people, thereby reducing its social impact. The important thing is not to lose sight of the ultimate goal while making realistic decisions to move forward, even under imperfect conditions.

Keeping up with the times

The coffee industry has successfully adapted to the socio-cultural constraints of its time: for example, it developed fair trade coffee when the anti-globalisation movement emerged. Initially, small coffee producers, often from poor regions, were exploited by middlemen and received an insufficient share of the final price. Fair trade labels were introduced to guarantee fair prices and decent working conditions, while providing financial stability in the face of volatile global prices.

Social enterprises also have an interest in adapting to the spirit of the times. If they do not want to quickly become obsolete, they must adjust their strategies to changing circumstances, whether these be societal trends, consumer expectations, government regulations or new technologies.

The paradox here lies in the need to respond to immediate expectations while remaining faithful to a goal of transformation that goes beyond passing trends. If a social enterprise allows itself to be overly influenced by the demands of the moment, it may end up losing sight of its fundamental purpose. For example, a social enterprise that provides affordable housing for struggling families could, under pressure to generate quick revenue, choose to sell some of its properties to private investors instead of keeping them for its beneficiaries. This decision could result in the loss of affordable housing for families in need, diverting the enterprise from its original mission of social inclusion and support for the most vulnerable.

The balance lies in flexibility: adjusting actions and priorities to meet current needs while maintaining a clear vision of the systemic transformation one wants to see.

Yesterday's good ideas are the foundation for tomorrow's good ideas: historical sedimentation

Our study of the coffee industry suggests that past decisions strongly influence future decisions and, in particular, that past ideas become entrenched to support future choices. For example, during the Second World War, coffee was viewed primarily from a pragmatic perspective, as it was a strategic resource for troops, used as a stimulant; this image persisted for a long time after the war, with coffee often seen mainly as an energy-boosting and functional drink. Conversely, the idealistic vision of coffee as a noble product was already present in the 1910s; this idea was later ‘dug up’ and reused much later, particularly in the 1970s, when coffee was once again valued and considered a prestigious product.

Our study of the coffee industry shows that past ideas settle to support future choices, and decisions, whether pragmatic or ideological, become a reservoir of positive ideas for the future. This is what we call historical sedimentation.

Take pragmatic choices, for example: when a company adopts an efficient technology or production method to reduce costs, it creates a solid foundation for its current operations. This business model, although initially focused on profitability, can also facilitate the future integration of more innovative solutions. For example, increased efficiency can free up financial resources that can be reinvested in more advanced technologies or sustainable practices once the company is ready to evolve.

Similarly, ideological choices can become valuable assets over time. A company that has integrated environmental or social practices before they become mainstream has often set a precedent that enriches its strategic heritage. This reservoir of ideas, initially perceived as cutting-edge, can prove crucial when market expectations shift towards greater sustainability or social responsibility. These sedimented ideas become benchmarks and offer a competitive advantage as industry standards evolve.

Therefore, it is essential for social enterprise managers to carefully document experiences and lessons learned from past decisions, creating a reservoir of valuable resources that will support innovation and future adaptation.

References

(1) L’industrie du café, un modèle d’équilibre entre pragmatisme et idéalisme - oct. 2024 - https://neoma-bs.fr/actualites/lindustrie-du-cafe-un-modele-dequilibre-entre-pragmatisme-et-idealisme/

(2) Tunarosa, A., Lê, P., & Pradies, C. (2024). Running on coffee: Paradox persistence in the US coffee industry, 1910–2020. Business History, 1–30 - https://doi.org/10.1080/00076791.2024.2310513