Through Diversification, One Company Brings Value to Inner City Oakland

“One thing we know about creativity is that it typically occurs when people who have mastered two or more quite different fields use the framework in one to think afresh about the other… But if you spend your life in one silo, you will never have either the knowledge or mental agility to do the synthesis, connect the dots, which is usually where the next great breakthrough is found.” – Marc Tucker, President and CEO of the National Center on Education and the Economy

As facets of our society continue to become more specialized, it is useful to remind ourselves that, for much of Western history, diversity of achievement was exalted as the truest testament of talent.

While the mention of Leonardo Da Vinci evokes images of the Mona Lisa and the Last Supper, less well known are his visionary sketches of tanks and helicopters and his contributions to the futures of manufacturing and geology. Perhaps then, the modern trend towards specialization can be viewed as a lens through which distinct problems can be solved. Just as Facebook brought another layer to Myspace and Pandora (number 2 on last year’s Inner City 100 list) combined the best of radio, professional taste, and individual preferences, firms across the country are creating value by cross-applying expertise.

So it was for Santiago Cuenca-Romero, CEO of Premier Organics, #21 on last year’s Inner City 100 list.

With a food science background and experience in the meat grinding industry in Spain, Cuenca-Romero went about applying his previous experience to the higher margin organic and raw foods markets through artisan nut butters and coconut products. After putting his life savings into the project, Cuenca-Romero and his two partners turned their idea into roughly $3 million in revenue last year and an average year-over-year growth rate of 70% over the last 5 years. Now, Romero not only wants to scale his existing operations, but also wants to diversify into other ingredients and create a stronger brand for consumers.

Continued growth will not be easy. The fact that American banks are currently sitting on $2 trillion in cash reserves makes finding capital tricky even for highly successful inner city firms like Premier Organics. Although research has shown that inner city companies generally garner less capital than their non-urban peers, part of Dr. Porter’s rationale for starting ICIC was that firms in the inner city – particularly those near urban clusters – have unique advantages that can be leveraged to create value. Located in inner city Oakland, Premier Organics has close proximity with many of its suppliers, access to public transportation, and a useful collaboration with Inner City Advisors, an organization that provides vital strategic support and services for growing inner city firms.  

Premier Organics is foremost an example of the power of trade clusters to create jobs in the inner city and a validation of ICIC’s ideas about urban economic growth. To entice companies in the emerging cluster to stay in the area, the City of Oakland has passed packages of tax incentives and built new real estate to improve surrounding neighborhoods. Presumably, better neighborhoods will result in increased pressure on local government to improve schools, thereby increasing the area’s talent pool and the firm’s competitiveness.

The virtuous cycle of commercial growth encouraging the public sector to take responsibility for previously neglected neighborhoods is what we at ICIC think can herald in a new dawn for American inner cities. If Premier Organics’ growth is any indication, Oakland and other urban communities are in good hands.

Are you the CEO of another high-growth company capitalizing on the natural advantages of being located in an urban area?  If so, you should apply for the 2012 Inner City 100 where your company will receive recognition for its success in Fortune magazine as well as a year-round management education offering including a day at Harvard Business School. The program is free and includes networking opportunities that have led to new business opportunities for program participants.  To apply for the program, please visit our online application. 

BY Sathya Vijayakumar on October 17th, 2011

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