Creative Distillation - Episode 10: Colorado Whiskey and Cooperatives Transcript | Leeds School of Business

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SPEAKERS

Desiree Pacheco, Jeff York, Geoff Kistruck, Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling, Brad Werner

Jeff York 00:14

Welcome to creative distillation where we distill entrepreneurship research into actionable insights. I am Jeff York, Associate Professor of Entrepreneurship at the University of Colorado in Boulder, joined as always by my co host. Hi, I'm

Geoff Kistruck 00:26

Brad Warner. And, Jeff, it's a pleasure to see you. I am an entrepreneur, we do a lot of things together. But for the scope of this podcasts, especially, but even in is how I defined my life. I'm really excited to be here today to explore some cocktails and some really interesting research that you're going to have a couple of your friends present to us today. So really,

Jeff York 00:50

yeah, I'm really excited about today. I mean, so. So one of the upsides of COVID, in my opinion, has been the ability to get people together from all across the globe, to talk about things without having to get them in the same place. Now, of course, we could always do that before COVID. But we often didn't, at least I didn't. And this has really pushed me I've noticed this in in conferences and business collaborations, and just in everything I'm doing to really kind of get more people from more diverse locations involved in a conversation. So today is actually epitomizes that for me, we're going to be talking to Amanda Ingle horn, from spirit hound distillery in Lyons, Colorado, just down the road here from Boulder, I and our producer Joel are going to be sampling some of their spirits talk to him and about their business. What's been going on with them lately, Brad will not get to take part in the tasting.

Geoff Kistruck 01:48

But so I'm very, very discouraged. I do have some angels envy here. But it actually might lead to a really interesting point on how to distilleries view competition in the design of new product offerings, I think could be actually really cool. But I will say one thing about spirit hound. our listeners know I am from Chicago. I've been in Boulder almost five years. And I will tell you, Amanda, that spirit house was my first stop when I moved into Boulder. So really enjoy your tasting room. I've had a lot of fun up there. The folks behind the bar had been extremely helpful. So just thrilled to have you around today. And also to be able to help plug your business because the product is is awesome. Awesome.

Jeff York 02:29

Well, yeah, but then, and I should say the reason Brad didn't get take part in today's tastings because he's in Chicago. And we couldn't really figure out how to get enough booze into his carry on to make it through there. So anyway, okay. And then after we have our tasting our discussion with Amanda, we're going to be talking to Jeff keystroke of Schulich Business School at York University, as he says in Canada, and we'll also be talking to cu alum, Deseret Pacheco, who is at ISC. I think I probably still said that wrong, even though she told me how to do it. She'll correct me in a little while, in Barcelona, Spain. So we have people from all around the world here today. But let's get to it. Let's talk to Amanda. First off. So Brad, you had some questions you want to ask her about what was going on the spirit hand, I think. Yeah. So

Geoff Kistruck 03:13

first of all, I mean, I'm really curious to have you talk through the tasting that you provided for Jeff and Joel. But But even before we get there, how do you decide about a product line? How would the distillery do you say, hey, this this year, we're going to do this and how does that work?

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 03:28

Well, you know, we have kind of a core core lineup of spirits that we've had. Since almost the beginning, we we actually started out with Jen like a lot of small distilleries do our flagship was whiskey, but you know, whiskey takes time if you want to do it, right, you have to set aside the time so you either have to have a large amount of capital and be able to just kind of eat two or three years or you make other products and so in the beginning we started with the gin the ricardos and then we ended up making a vodka was kind of byproduct of having ethanol around um, but you know, or gin was actually one of the things that I was intending to send with you guys but I haven't been in the distillery the last couple days so they sent the ROM which also has a really fun story it came along later but the gin we when we first started we decided we wanted to use local juniper berries and so we you know, we kind of put out the call when we said if you know if you bring us a bag of like two cups of juniper berries like a baggie four fingers high, we'll give you a free Gen drink. And so people have have ever since they just you know, go forward to juniper berries for for us and bring them in

Geoff Kistruck 04:41

collaboration with the community. I love that

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 04:43

it is yeah. And you know, they're all local juniper berries and there are different varieties of Juniper that, you know, Scottish juniper berries are not Northern Colorado juniper berries. So we have, we have Rocky Mountain Juniper here and that's, that's part of our signature flavor. It's it's a particular type of Juniper. So a lot of times when I you know, when you're deciding on your product lineup for me, it's the things that kind of make us unique. So are Jen is one of them, which I would have included the ROM that you guys are going to be tasting. So that one you know, we have four business partners at spirit hound. One of them, like I mentioned is my husband, our head distiller Craig. But two of them are kind of silent partners. They're not involved in the day to day, but they do like to go to conferences and things and so one of them had gone to a conference and entered a raffle to win a USD Buffalo Trace barrel. And and he won it. And he gave it to her head distiller and Craig said, What am I supposed to do with this, I have to do brand new barrels every time for our whiskey, like, I have no use for us barrel. And so you know, he's like, well, if we make some wrong, we could probably use it. So we got a hold of some molasses and some cane sugar and did an experimental batch of rum. Well, it turns out that rum was sitting on the floor when we flooded in 2013. So it was you know, over half submerged in flood mud and water. And so that kind of became a it was a fundraiser that we ended up doing we released we called it the flood round we do our a lot of our things by the barrel. So you know, barrel number one, girl number two, well, this was not barrel number one, it was flooded rum. And we auctioned off some of it and we sold some of it and the proceeds went to our fire department in Lyons. And you know, it's so again, our rum is, a lot of times it's not a focus for us, but it is a pretty unique product and a good part of our lineup, right? So

Geoff Kistruck 06:35

you know who your stakeholders are? Right? It's it's beyond just the financial return. It's a collaboration with the community. Absolutely. So many ways that you reach out and touch people and make sure that the business is kind of doing the right thing and representing the right thing, it seems to me.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 06:49

Absolutely. And our community has been there for us in so many ways. Again, during the flood, you know, people showed up to help us muck out the distillery itself, the Red Cross showed up to feed us. We've we've been in that position where we've had to take stock of you know what's important, and who's there for you. And so we like to get back when we can.

Geoff Kistruck 07:09

Yeah, that's fantastic.

Jeff York 07:11

Hey, Joel, should we uh, should we taste the rum? Let's do it. You should. Yeah. So we've got our producer Joel is gonna join me in the tasting this week and the sacrifices I make when Brad's. I know it's a tough gig a tough gig Joel has here.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 07:24

Yeah. Yeah, so the Rama

Jeff York 07:27

nice aromas. I get the molasses a little bit. Uh huh.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 07:31

Yep. Yep. cane sugar. It's fermented using a yeast that apparently from what I've been informed is is kind of a true style yeast cultivated in the Caribbean so it throws off some nice characters and

Jeff York 07:44

oh, man, I wish we had time to ship this to Barcelona.

Brad Werner 07:48

What's your first impression Jeff?

Jeff York 07:50

It's super smooth. I really like the aroma that a lot I don't usually drink rum straight up but this I would you know, like, you know, I just would probably throw an ice cube in this that need much more real data

Geoff Kistruck 08:03

is it isn't meant to be mixed like you know, Roman tonic or something. It wasn't meant to be drank as Jeff is having it right now.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 08:11

Yeah, kind of both. We've we've done some pretty fun cocktails with it honestly a classic Daiquiri with just rum lime juice and simple syrup. It's pretty fantastic.

08:22

Your bartender was talking about that last night is the recipe for that perhaps on your website

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 08:26

and it can be I think it should

Jeff York 08:31

have answers this summer. Mohit does for me. That's ROM is probably my been my favorite spirit the last couple of years. The Caribbean rounds, a lot of Venezuelan Dominican rum. They're very sweet. Almost a caramel flavor. This isn't quite as sweet as that but I still like it. It's very smooth and very drinkable.

Geoff Kistruck 08:52

Are you Joel? Are you drinking rum straight up normally are you

Jeff York 08:56

straight up and since I was there, I just went ahead and bought a bottle for myself. Like

Geoff Kistruck 09:01

there we go. That's what I love about this. So so pretty soon guys, I'm also a rum drinker, which is going to be surprised to our listening audience. But but all all summer, it's pretty much ramen tonics for me just it takes me back to the islands. And I just, it just makes me feel good. Just even the process of slicing the lines and the whole thing. It's this experience that really resonates with me as well.

Jeff York 09:22

Modeling meant what it's all about for me with Rome, like Yeah, you got to have a decent muddler. I've been using the back of a wooden spoon all summer to the point where it's starting to fall apart.

Geoff Kistruck 09:32

So hey, Amanda, has this been a commercial success? For the distiller?

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 09:36

Yes, we don't we haven't really pushed the run quite as hard as some of the other things. But you can find it it goes to our distributor, so it is distributed out in Colorado. And so yeah, did you know people tend to like it. It's a steady seller. I would say our Gen and our whiskey are kind of the focus. Those tend to move a lot faster. But yeah,

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 09:55

I would say it's a success.

Jeff York 09:56

Am I wrong in thinking that maybe you're one of the few distilleries reason the area making run because I don't think I've seen run for many other local places.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 10:04

There's not many you know, there's muntanya Rum. Gosh, there are a couple I believe long tukey in Longmont. They make some so there are a few. But

Jeff York 10:15

I have a student team that made a horrible one one time. They're making sugar beet ROM out of Colorado sugar beets.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 10:22

Yes, yes.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 10:26

And we have not done that. And I actually the rules may have changed but as far as I know, you're not allowed to call rum made from sugar beet sugar rum, because in the rules that explicitly says cane sugar, molasses or cane sugar.

Jeff York 10:41

Well, the concoction they made and made our guest judges in class sample was so horrible, like, oh no. I used to work in East Tennessee. I've drink some moonshine, but man, that was rough. Anyway. So for me the only time that delicious that was just fantastic.

Geoff Kistruck 10:58

I spent a lot of time on the outside. I spent a lot of time in the ocean when I was in college. in Antigua, we found a bootlegger that did ramen, you would take your one gallon milk jugs over to his barn, and he'd fill it up for like three bucks. Only time ever that I've driven a dinghy up onto a reef. But it's pretty cool.

Jeff York 11:20

So we also have a single ball, right?

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 11:21

You do? Yeah. So this is our this. This is our baby the the straight malt whiskey. You know, in early days, kind of the inspiration for the the strip mall was back when Craig was brewing for Oskar blues. So he he made a kind of a scotch ale a wee heavy, that was super smoky at the time. And he went to, you know, Colorado government and said, hey, what would it take to make a distillery so I can distill this and make a whiskey. And it didn't take very long for them to suck all the fun out of it with the rules, because at the time there were no distilleries in Colorado. And so he just kind of let that idea go. Fast forward. You know, I don't even know how many years now. But he he that was that was the inspiration. He went to his friends and said, Hey, you know, I want to make a whiskey. I think this would be fun. And so he wanted to make a straight malt whiskey with all Colorado ingredients. At the time. There was only one monster in Colorado that were malting their barley. And so he went to them. And, you know, we got our first batch of grain and they didn't actually make a smoked malt at the time. So we had to get our smoked malt from Scotland. But they do now. And so now it's 100%, Colorado product. And all all malted barley, it's at least it's about two and a half, three years old. We've done older expressions, we actually just released a seven year old whiskey barrel number one about a month ago. And yeah, it's 90 proof.

Jeff York 12:54

It's really good.

12:56

Yeah.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 12:59

I was one of my new favorites.

Jeff York 13:00

I'm really I'm really sad, Brad, because you're definitely the whiskey guy amongst us. I can tell you a lot more about beer than we guys

Geoff Kistruck 13:06

this is killing me. Actually. This is really really killing. I'm

Jeff York 13:09

just gonna say Brad. I left a set of samplers with Jeff hopefully he didn't drop them and break what happened to the scene that Joel

Geoff Kistruck 13:19

all right well, I know we're spirit hound is going to be up there very soon. big puzzle

Jeff York 13:24

delicious fantastic so so last time I really did the much really I'm not big whiskey guy like it but last tasting I did was in was outside of Glasgow actually I was teaching for Glasgow University. And I can't really understand what the guy leading the tasting was saying but this immediately the smell the aroma took me right back to those the Scottish whiskies it's not overly PD it's definitely there but it's not like he's Brad helped me out like what's one of the some of the ones where you feel like you're drinking a campfire.

Geoff Kistruck 13:56

Oh, so so I've had those I can't even think of one by name. There's some Yes, and I used them like to coat the inside of a glass but for me, extra PD is not that where I

Jeff York 14:06

live my tables go weed whacker going yeah,

Geoff Kistruck 14:09

sorry, guys. I just had the the gardener's just actually pulled up right outside of the window that I'm sitting next to. So I apologize and I don't know how to.

Jeff York 14:19

It's good. It's awesome. So this is great. Joel Not only does bread not get to taste the whiskey yet, himself.

14:25

Yeah, this

14:27

episode.

Jeff York 14:29

What do you think about the whiskey Joel, you probably have more thoughtful had I had a scotch phase many years ago, but I kind of got out of that and into bourbon. And when I picked this up last night, I was just thinking like, oh, it'd be whiskey. It'll be you know, like bourbon, but

14:43

not bourbon.

Jeff York 14:44

But then I was driving home I'm like, wait, it's malt whiskey. It's

14:47

gonna taste.

Jeff York 14:48

Oh, yes, it is. As soon as I tasted it, yeah, it's great. It's got that PD, smoky flavor, but not overwhelming. It's just a little bit numbness I always get when I drink a good scotch My time sounds really weird. But I've always noticed it's like the after effect of I don't know enough about whiskey to really talk about authority. But to me, it's the mark of like, really authentic for me.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 15:13

Interesting. Yeah, well,

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 15:15

we the the smoke that you're getting, we only use 18% of the grain bill is a smoked malt, but it's not. It's not a lot. And, you know, we we do single barrel expressions. So right now you guys are drinking barrel 165. And so I think 165 actually did come out a little bit smokier than some of them tend to, which I personally like, but, you know, some of them don't get as much of that, because each barrel is unique, you know, it kind of depends on the distillation, you know, we're small batch to kind of, we do things by temperature, but also by taste. And so you know, if somebody's not paying attention, the cuts might be a little bit different from one time to the next or the barrel is stored somewhere in the warehouse. So closer to a door, or, you know, there's lots of factors that kind of go go into it. So we do end up with some that are a little bit smokier than others.

Jeff York 16:03

So cool that distilling like you get all the variation over time and the different badges and, and even if you're a nerd, it's like the beers supposed to be exactly the same. I mean, of course, we will do barrel aged beers and stuff like that.

Geoff Kistruck 16:15

But how long is Amanda How long is this sitting in a cask,

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 16:19

these are sitting in full size barrels for at least two years, we do straight whiskey. So straight has to be the rule is if you say straight whiskey has to be at least two years old. We're trying to put more aside so they get older as time goes by, but as demand increases, you know, it kind of fluctuates. So we tend to be between two and a half and three years old, currently,

Geoff Kistruck 16:37

is that kind of a standard for an American made whiskey,

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 16:40

it is usually four ish, um, we use brand new barrels, you know, in America, we have a plentiful trees. So we can use a brand new barrel every time and in order to actually call it straight whiskey, it has to be a brand new barrel every single time. Hence, the fact that a lot of our straight whiskies from the US or those us barrels end up in Scotland, because they don't have that rule, they can reuse our barrels. And so brand new wood has a lot to give really quickly. And so you you run the risk of overlooking your whiskey with brand new barrels. And so I think a lot of people think like, oh, it can't be a good whiskey under four years old. Sure, because we have in our heads, you know, 10, year 12, year 20 year scotches, but they have a completely different climate and completely different barrel type over there than we do.

Brad Werner 17:29

That's really interesting.

Jeff York 17:30

Maybe we should try the last one,

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 17:32

the liquor or the coffee liquor richardo this is what we give to people who come into the tasting room who say, I'm not really much of a spirits drinker, and you're like, hold

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 17:41

on, I got something for you.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 17:44

So this is, yeah, it smelled

Jeff York 17:46

it. Holy cow. Yeah.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 17:48

It's a decaf coffee liqueur. You know,

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 17:50

a lot of vanilla. It's just delicious to drink, you know, on the rocks over ice cream. can do it with pretty much anything.

Jeff York 17:58

Wow. Maybe a good offer gado. You know that's an espresso with ice cream scoop of ice cream in it.

18:04

Yeah, it's

Jeff York 18:06

really nice caramel. Super caramel on the back end vanilla on the front. When I was talking to Craig last night, Amanda he said that, because you know when I see the word decaf, I'm immediately just like, not for me. Like a true entrepreneur, Joe. Yes. But he pointed out the beauty of it. Is that okay, you want to try a little decor, but it's a little late at night. You don't want the coffee? You want the decaf, so

18:31

yep, you go.

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 18:32

Yep, you can always add it to caffeine, but you can't take it away.

Jeff York 18:36

This is fantastic.

Geoff Kistruck 18:37

So what's your thought Jeff? Is it is it a dessert drink to you? Or how does this kind of fit in if you're drinking day?

Jeff York 18:43

Why would this would be a breakfast beverage?

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 18:46

It really does go great in your coffee on like Christmas day.

Jeff York 18:51

Every day is Christmas here. But yeah, dessert. Be Awesome. You know did just Steve. Really not? Yeah, move over Bally's.

19:01

Oh, yeah,

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 19:03

it was some nifty and orange.

Jeff York 19:06

I would take this over Bally's for sure. Yes, that was that is delicious. Wow. Yeah. Holy cow. The room of it. I could see like someone who doesn't like spirits. Just smelling that and saying hey, yeah, I mean, I think any, unless you had like, a serious aversion to like, dessert, or you had traumatic. You've had a traumatic episode in your life involving a hot fudge sundae. could smell that and not say, Well, I want to taste that. That was delicious.

19:36

Yeah, yeah. We

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 19:36

try to have something for everybody. You know, not everybody can drink straight whiskey. And

Geoff Kistruck 19:41

yeah. So what was the story? How did it come around? You said you said it was kind of designed for people that were not the whiskey type. But how did you actually land on

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 19:48

this? Well, so return is was actually it came to us. We got lucky with that one. So there's a local guy in Lyons who was a surveyor by trade, who had been making this stuff in his basement for you No Christmas gifts for years he it was actually that, you know, he was richardo. And so we were starting the distillery, he came out to survey the property for the building and kind of started talking to the guys. And he's like, Well, you know, I don't want to start a whole distillery for one product. What do you guys think about making this for me? So you know, we gave it a try. And it's just been so popular that yeah, it's like I said that just like, you have a couple that comes in and one of them likes whiskey and one of them doesn't. And the we usually the one that doesn't goes for the ricardos.

Geoff Kistruck 20:32

Yeah, that's great. Actually, it's gonna be in my family stockings for this Christmas, the way that you're you're speaking to this, I think I'm really excited to give it a try.

Jeff York 20:40

It's really unique, too. I mean, I'm trying I can't think of something I've had quite like it. This is fantastic. Man, thank you so much for joining us like, so you guys are located right there in Lyons, Colorado. If you're driving through the beautiful town of lions, which is just a fantastic place to visit, stop by there. What else can our listeners do if they want to, they want to obtain your products? And they're not coming through lions?

Amanda Engelhorn, Tasting Room Manager, Spirit Hound Distilling 21:02

Well, we're distributed statewide in Colorado. So you can find us at pretty much any liquor store that has a good craft selection. We're distributed through breakthrough beverage, so if they don't have it, usually they can easily obtain it. We are distributed in Texas as well. It's kind of random. But no, we're slowly expanding our distribution. So you can kind of look for us down there. And otherwise you just go step by the tasting room.

Geoff Kistruck 21:24

I'm hoping my Chicago folks sometimes Amanda will get a chance to be able to purchase this from you. They're they're missing a lot by not having spirit hound on their menu here. Well,

21:33

I think so.

Jeff York 21:34

Anybody go into a Rocky Mountain National Park is going to be on your way. Or at least it should be these are. This was fantastic. Thank you so much on your ride. You're coming back. Yeah. Got you on your way. And then coming back again, on your way that you know, you carry a suitcase. I'm like Brad, and then you'll be ready. you'll be all set. Awesome. Yeah. Thank you so much for joining us, Amanda. I guess now we should talk about academic research. Brad, your favorite topic? Yeah.

Geoff Kistruck 22:02

Well, you know what, I think that I would need the caffeinated version normally to stay stay awake through the academic research section. So this will be really good.

Jeff York 22:09

We're gonna be talking to two of my favorite people today. So you're gonna you're gonna enjoy this.

Geoff Kistruck 22:13

Oh, yeah, I guarantee it. I'm just teasing them.

Jeff York 22:16

I know. I know. As always, we always like, we're always like, Hey, you guys your bread like you guys really like you see things really done. Like actually, we're pretty much just the same, but we just like make it seem like we don't. But these are these are two of my favorite researchers. These are at Chico is Associate Professor at ISC. That's it. Write that talk?

22:35

yes, say yes. Say yes, I

Jeff York 22:36

see. I thought I get better at saying it. In Barcelona, Spain. It's a fantastic school. But more importantly, of course, he's as an alum of the Ph. D. program here at the School of Business, University of Colorado, one of our favorite alums, fantastic researcher, more importantly, just a wonderful person, we've written a lot of a lot of stuff together over the years, she was really the first person to tell me like, Hey, you know, Jeff, the business could actually solve environmental problems and point me towards actually reading things where people said that, so eternally grateful to her for that. And also, we have joining us another one, my favorite researchers, Jeff kestra, who's at the Schulich School of Business at York University. My favorite named University, who also recently visited us here in Boulder gave a talk to our PhD students about field experiments, which I imagine they'll be talking a little bit about today. So Jeff, does Ray, awesome to have you join us? I think this paper is really fascinating. The title of the paper, is how formal and informal hierarchies shape conflict within cooperatives a field experiment, I'm sure that got bread. Oh, my God, you know,

Geoff Kistruck 23:45

I'm just thinking, how long did it take you to come up with that frickin name?

Jeff York 23:48

The last part that I skipped in Ghana is the last part, which I think is the part that rabbit like, really seriously, they do the favor, because you're we're very used to seeing papers that happen in the United States, or are very exotic papers that happen in the EU. So this paper, you know, taking place in Ghana, first of all, is really interesting. This paper is available. It's just published in April in the Academy of Management Journal. Why don't you guys tell us a little bit about how this project came about what you're up to?

Geoff Kistruck 24:17

Yeah. Okay. I guess a little background overall, is I've been doing a lot of research for a number of years on sort of business as a tool for poverty alleviation. So for a long time, it was the role of NGOs and United Nations and everybody to dig wells, food aid programs, this sort of stuff, very common. But they started realizing that they had to keep coming back, and that it wasn't very sustainable. So they didn't have these poor villages and try to help and unless they continue to show up every week, then the people would continue to go hungry. So they started realizing that maybe business was not the enemy, and that if we could somehow leverage the power of markets, then we could improve this. So The organization that we worked with on this project was a very typical NGO, I personally have done a lot of work in about 40 different countries now, a lot of them in this poverty area and trying to see how they're trying to leverage business to aid the lives of the people that live in that community. And more than anything else, where they're screwing up, which is sort of the I think maybe the the preface behind some of these workshops or the podcasts that you guys are doing, is I think, too often academia and practitioners talk past one another if they talk at all. So all these projects that I do are very much driven by talking to a practitioner and asking you what's keeping you up at night. But what is it that you're that that literally is bugging you right now that you don't know how to get past. So on this one is easy. It's talking, I was over in Ghana, so we chosen that we'll find different projects and going on and on at that time, this is one of them. It's up in the Northern Region of Ghana. So Southern Ghana is doing pretty awesome. They're actually doing well, they're pretty much close to develop country contacts, you can find the odd BMW there, wherever the hell you want to evaluate economic development. They're doing all right, you go to the north, it's horrible, absolutely horrible. People can't eat from day to day. So what they were trying to do was they were trying to put together groups, new groups, so they go into a village. And they find a lot of people were farmers, this is all they did was farming, obviously very seasonal. And on top of that, if there was any drought, if there was a whole bunch of different issues, which often there isn't these settings, then they go months without eating. So they said we need to put together new groups of people, they can get economies of scale that way, if we put them together, and we're going to take products that we think can sell them the capital and, and the local city, tamela, and different places like that. So let's have them collectively make soap and baskets and shea butter and just different things that they thought they could actually make money off of. So I'm sitting there listening, and I said, This all sounds awesome, you know, heard this sort of approach model before, what's the problem? He said, Well, our goal is after about a year, year and a half, we want to get out, you know, we don't want to be like we used to be where we always got to deliver food every single week or whatnot, we want to say, Hey, you guys are your own group. Now. We're going to leave and you're going to continue to to transport your products into the local village and sell them there. And they said, and what happens is, you know, we did 121 of these things over the last few years. And most of them have fallen apart. Well, that sucks. Why? Why have they fallen apart? So as well as lots of different reasons. But the main reason is they fight. Let's see what we mean by fight. He said, Well, you know, we come together, we bring them all together, we're sort of the glue that holds everything together for that, you know, year, year and a half. And then when we leave, there's all these disputes. Everybody's like you're not pitching in here, you're not doing this thing here. They fight over who's supposed to make this who's supposed to go to town. And eventually they forget why they're even working together. And they disbanded. He said, so this is a real problem. So as we often do, we turn to our nerdy books and journal articles, and say that we have a solution for this. And we started reading. And this is how Deseret came on the project is there's actually all that desert tell a little bit but there's a famous woman named austro. So there's we want you to tell him a little bit about Elinor Ostrom.

Desiree Pacheco 28:17

Well, Elinor Ostrom, first of all, won the Nobel Prize in Economics for her work. And what she did is she defied this idea that we cannot govern common property. And so this is common property is not resources that are shared, like for example, a leak, etc, right, that everybody can go in and use it. And so the general economic idea is that when you have common property, it's really hard to manage it collectively. And so when economists would tell you know that you have a lot of issues, this is not going to work. And what Ostrom showed was the opposite is that you can have collaborative governance that that does exist. And she showed a variety of examples over and over in Japan and in different places of how there could be harmony, and good coordination across the management of common property. And so I was doing a talk about Elinor Ostrom and her work and how it could be applied to management. And actually, that's how Jeff and I met, or started talking more about this. And he said, You know, I'm doing this project. Well, ups that are managing together, all this resources are being given to them, and conflict arises. And so we said, wow, you know, this is really interesting. It's definitely what an economist would predict. And an economist would also tell you, the larger the group, the more conflict you're going to have. And so I first thing I asked is, Jeff,

29:40

how big are these groups?

29:42

And so but anyway, we kept working on different potential solutions and really explanations for why this conflict was taking place. And so this is sort of where we arrived at the idea of creating a field experiment. So this is a live experiment. We have over 40 groups that were being set up, they had not started yet. And so it was a perfect opportunity to go out there and design the experiment. And so we decided to create an intervention where some groups, were going to have a flat governance structure. And that meant that those groups are going to be coordinated through committees. And so actually, something really important here that I should bring is this idea that this groups are pretty much set up as co ops. So there's shared ownership, that's at least what they all have in common is share ownership. At the end of the day, the money that you make whatever you make, you're going to come back and you're going to share that. Right. And so that's a very important premise for where we're coming from. And so we decided, well, let's take a look at this. We know that the Canadian society is hierarchical by nature, it's a place where hierarchies matter. But yet, and these NGOs come in and they assume that hierarchies is what's going to work. And so that's what we still said, But wait a moment. These are groups, what if in this Co Op, a flat structure is better, because there's already shared ownership. And when there's shared ownership and shared control, maybe things will work out better? And so that's where we designed the intervention

Desiree Pacheco 31:16

to give some background to that desert? Yeah, thank you that they, the you know, we went over there jumped on a plane again, and started going around and asking, and we had Elinor Ostrom work in front of us. And she has seven principles elbow right there seven, right, seven principles that you need to follow you on this tour. So we're like, ah, we're gonna find out. They're not following one of the principles. So we're like, what about this one Check, check, check. I can remember being in the back of a van going, God dammit, they got them all. Like, you know, here's this award winning work of a Nobel Prize. And we thought we were going to find the answer here. And they're doing all seven of these, what is going on? So we started talking about we went into these groups, we'd arrive at a village and we'd say to them, you know, can we, you know, can we can we start talking about something, and everybody would look at their feet besides one or two people. And we found out afterwards that was either the chairperson or the VICE CHAIRPERSON. So in every single one of these groups for creation of coordination, each community that got set up in a local cooperative, they had a chairperson, a VICE CHAIRPERSON, a secretary and a treasurer. And there's really good reasons for these things. They said, Look, how do we schedule meetings, we don't have cell phones here. So you need somebody to go out and actually arrange these meetings, who has to handle money, this is no bank here, like somebody has to have the box, they have to keep it in their house, they got to lock it, they got to bring it out for the means they got to do these things, we've got to have that we've got to have these things. But what we found is we're talking to them is that besides those four people, nobody really gave a crap about what was going on. So you know, if you think through to the problem that started here of them, saying, hey, a year and a half later, these things just fall apart, we sort of hit them up and say you actually might be the cause of this. So in other words, as Deseret was saying, this is the way they all do it. And when I say them, there's 100. They do big organizations like care to savings groups, they have all these models that are similar. And every single person now has a chairperson, a VICE CHAIRPERSON, a secretary and a treasurer. There are millions of these things out there now, literally, throughout the developing world. And this is how they're structured. So to Deseret point, when we went to them and said, we have an idea, we want nobody in charge. Hey, looked at us like we were insane. For two reasons. Number one, somebody has to be in charge. Because this is the way this is always done just that regular sort of stuff. But then to what Deseret was saying even more so in Ghana, somebody has to be in charge. They're like, you may be able to walk into a room wherever you live Canada or America or Spain, and sort of just like, have a conversation. Ghanaians walk into a room, they immediately assess who's number one who's number two, who's number three, and who's number four. And it's based on all sorts of things age, seniority, are you part of the Chief 10? Are there just a whole bunch of different things? They said, you're trying to set something up where nobody's in charge, it's going to be a disaster. But we were able to finally talk them to saying, okay, you're going to do 80 new communities next year, new cooperatives next year, you do 40 your way, the way that you've always done them, you put the four people in charge you do your groups, we want to try 40, where nobody's in charge. There. I'll turn it back over to you, man.

34:26

So why do we funding right, let me first talk a little bit about part of the process of the field experiment. Of course, Jeff, and our wonderful co author Angelica, go there and do a lot of interviews, right, figure out what's going on. And so we designed the intervention, right? And so the signing and intervention in this context, obviously is difficult in the sense that they speak a different language, it's a different culture. How do you communicate with these people to tell them what this group should do and what this other group should do? Right. So I I learned a lot from Java that had had experience in these types of contexts, getting this kind of stuff done. And so we had to train the trainers, the trainers would then go and talk to these different groups about, hey, you're in the obviously, the participants don't know that this is an experiment in that sense. So you're in this type of go up is very flat, you're going to be managed through committees, right. So when the flat in the flat condition, they have committees, because there still needs to be some distribution of work, right to get things done. So they all did it through committees. While in the hierarchy, we had the typical structure of the treasurer, the chairperson, etc. Now, let me be clear, these are still elected positions, because it still is a co op. And so these are still elected positions. But there's some distribution of responsibilities and major decisions are still done collectively. But the day to day work was being managed by others. And so this particular positions, and so, go out the back there, and why did we find? Well, we find that the formal what we're going to call now the formal hierarchy, this structure of having this different positions in this co ops actually lead to more conflict in the group. Right, so what the NGOs have been doing all this time, lead to greater intergroup conflict. And so that alone was like, wow, you know, we we didn't really know what to what to expect. And we really think that the reason for this is because there's a big mismatch between having a core but we think about what a co op is a co op is shared ownership and shared responsibilities and decision making, right? shared ownership and control. And now you're putting a hierarchy on a co op, right. And so there's that sort of mismatch between, hey, we'll own this. But now you're telling me what I need to do, right. And so in that sense, we think that's the main reason why a formal hierarchy is leading to more conflict in this context. And also, and we

Desiree Pacheco 37:07

do that over here, we have accounting firms, we have law firms, we have all sorts of quote we have, we have producer cooperatives, we have farmer cooperatives, we have all sorts of things over here, just to contextualize it, that they also tell them they're equal one person, one vote, and then they put a hierarchy in place.

37:22

And we're not saying you know, how you're working folks at all, but in our context, with the size that they were, and, and specifically, what we were doing, it really did seem like it just simply wasn't working, it was just a mismatch. And part of the reason for this and what we think explains it as well, really importantly, if you're in a flat structure, you feel like you have more ownership by the so called psychological ownership. And so having that weight or psychological ownership, makes you feel like this is still my thing, and keeps you as a member of the group much more committed to what you're doing, which actually reduces conflict in general.

Geoff Kistruck 38:03

This is fascinating. Before you expand, I just like to save for me, there are two things that really jumped out at me and kind of the overview, which is, well, there's a there's a bunch, I have two pages of notes. Number one, the concept of ask a practitioner, duh. Right. So I think that says this a logical breakthrough. But hey, Jeff, trust me, we've had people on here that may not even be able to recognize a practitioner. So that is really importantly, and then Deseret, when you were when you're speaking of collaborative governance. I actually think that that's fascinating and all the other things that could mean beyond the scope of your work, and then leading into this culture of hierarchy, right, which, in a sense, you had to really go against the grain, and I'm doing a lot of work in international entrepreneurship, too. And culture is this driving force, right? rightly so. And breaking through that culture, because their habits or systems that are already in place, can really set you up for failure. So I think that that's interesting. And then finally, using this as a way to solve or entrepreneurship as a way to solve social issues. That's why I'm an entrepreneur. So So there were lots of things that resonated with me. So anyway, go ahead, Jeff. I'm sorry to jump in there. But I just kind of wanted to at least bring some focus on where it was resonating with me as a practitioner?

Desiree Pacheco 39:19

No, not not at all. I was just, I was just going to expand a little bit, we tend to go back a lot. So we do we spend a lot of time in the field a lot of time on the ground. So going back afterwards. To your point, Brad hearing some of these stories. It's not like there wasn't any discussion that happened. Tense discussion in these No boss groups. See, we actually thought it would go down. At first, we thought what would happen is if there's nobody in charge, this thing's really going to suck for the first month or so. But then they're going to work it out. What we found is red or the gate, they were beating the other group to the point that after we'd spent two months convincing these trainers to put nobody In Charge, we then had to convince them again, not to get rid of all hierarchies. At that point. They're

40:06

like, Oh, my goodness, this

Desiree Pacheco 40:07

is the best structure. We got to get away with fire every Chairman phytotherapy. Vice, we're like, No, no, no, no, no, don't jump overboard here, Kelly.

40:15

Hey, that's it. That's it.

Desiree Pacheco 40:17

Yeah. And we're like, first of all, this is a pilot study. So we don't know that what happened for the first month, this is why it's lasted six months, why would happen for the first month is going to happen for the next couple months. Let's be patient here. But afterwards, we got a chance to talk to everybody in here Why? It was really a lot of the younger people that could have been driving forces within the cooperatives before that we're not. And we had stories of actually making a production decision about whether or not they should produce 20, or 30 bars of soap was one example. And an older woman got up and said, well, it's going to be 20. And a younger woman just jumped up and said, You're not the boss here. She said, outside of this circle, yes, I have to listen to what you say. But within this circle, we've been told that she points to the chart, like everybody's in a circle on the chart. And we've been told we're all equal. And that didn't cause friction, we thought that might cause friction, but it caused discussion. And they began to appreciate what it was about age or older people that was valuable to say they do have wisdom, they do have these things. But they rejected power and authority based solely on the fact that you held a position a formal position that didn't make any sense.

Geoff Kistruck 41:31

You know, that's amazing that you gave them a license to speak their mind.

Desiree Pacheco 41:35

That's what we were hoping would happen, and that they would, at the end of the day, turn around and feel like that organizational structure was worth continuing with that. But it was something that because they did have voice to your point, that they want it to be a part of it, even when the NGO left accurate. I

Geoff Kistruck 41:51

think that's a great lesson for just executive teams anywhere, right to be able, yeah,

Desiree Pacheco 41:55

you, you, you you posed that question earlier. And I still don't have an answer to it. But I do think, Well, part of it is startup, I think of it, I've been an entrepreneur in my life as well, I think about startup teams. And you know how very often when you get going, I think there's a lot of focus around going from an individual to a group requires putting administrative structures in place, putting processes in place, putting all of the stuff, but don't lose sight of the fact that you're small. And this is all built on human capital right now. And that what ends what Deseret was talking about, it's actually a construct called collective psychological ownership. It's an established scale of items, you ask people, and we actually asked them at the beginning, and then six months later sort of thing, seeing the importance of that as a mechanism for making sure that people continue not just to feel like they're owners of the place, but that they start using the word we saw, they use the word me instead of me, right? Like we actually saw in their language, if there was a problem that came up, they would say, Well, what are we going to do? versus in the other groups with the hierarchy? They would say, what are you going to do? Like? In other words, you know, you showed up late, what, what are you going to do about this, and I just thought about as a startup phase, when you're trying to sort of brick Lodge and, and make use of sort of all these non traditional forms of capital, you know, being able to sort of, once you get bigger, you can give out stock options. Sometimes you can do that as an entrepreneur as well, and a little bit of equity and whatnot. But they didn't have you don't have to necessarily do that, you know, you can use employee stock option programs, one, or you can sort of instill this sense of psychological ownership by using these flatter structures. So my question

Geoff Kistruck 43:25

though, I'm thinking about the elective positions that both you and Deseret mentioned, are their term limits there, because I guess if you don't term limit these folks, you go

43:33

back into haircut, right. And this is still this is still a higher up, it says cola. We wanted to make sure that there was still that sense of this is a co op, right? Because otherwise, you're just a company, right?

Geoff Kistruck 43:44

That's right. What was the process then Deseret for that? And kind of how did you arrive at what term? Me