Goldlake/Eurocantera Honduras

Can people and the environment be at the centre of a successful business model? Does social innovation and community inclusiveness ever lead to competitive advantage? The GOLD Group, an international for-profit Italian holding company, was set up in 1996 by three brothers and in less than a decade it grew into a diverse portfolio of businesses including construction, finance, mining and telecommunications.
 
This case focuses on GOLD’s launch of Goldlake, a mining industry investment company, and the group’s continuing determination to ensure its activities are socially responsible, environmentally sound and economically sustainable. Sinan Erzurumlu, Babson College, discusses writing the case which he co-authored with Marty Anderson, Babson College, and Assheton L. Stewart Carter, Goldlake Group.

Competition advantage

We are interested in organisations that create competitive advantage from unconventional resources or by approaching social issues in new ways, and Goldlake is a great example. Theirs is not a traditional model compared to those businesses that fight problems with money, especially in mining. The result is often an over-exploited community, environmental degradation and injustice. In contrast, Goldlake displayed entrepreneurial thinking at work. We wanted to learn more and tell their story.

Open and collaborative

The case would not have been possible without the help of the Lewis Institute at Babson College, especially Cheryl Kiser. She was very supportive and helped us to find an organisation associated with social value creation. The GOLD group was very open and has been very collaborative. They were as excited about their approach as we were and wanted to talk about their business model.

Key protagonists

This is a family business with a number of key characters managing the company. It’s very important to have such people to identify with in a case so you can empathise with the need to make business decisions while thinking about social outcomes; it is easier to do a cost/benefit analysis and go with it.

Goldlake sent a geologist to do soil analysis and a representative to meet with locals during the very early stages of field analysis. This is a very different approach to the more usual one of waiting to strike gold first (literally!). Therefore, any leader, like Giuseppe in this case, has to think about this social angle from the beginning. It is the family members who make it happen. These protagonists demonstrate entrepreneurial thinking and decision-making; identifying with them can help students understand how the social dimension can generate payback.

Time and resources

We were able to visit the mines and meet with the locals, the miners, the engineers, the key management team and the Colaiacovo family. After you hear the story from different sources, certain key characteristics of the business model emerge. It takes time and resources, but it is a unique experience. I feel like I have worked there now!

Family business

It’s very important that this is a family business. What they are doing is unconventional, but as a family they can pass on their knowledge and experience from one generation to the next without disruption. The close family ties help them consider the longevity of their decisions and understand the history of where the company has come from and where it is going. This is not only passing on a business, it is passing on ideals and aspirations and there is a lot of personal investment.

The key characteristic, though, is entrepreneurial. Of course, they do not have to answer to shareholders, but having said that, there are B-corporations that report on the social and environmental effects of their business, so I would not say that going public means the end of social innovation.

Breaking barriers

Companies that are profitable while also being socially and environmentally responsible are presented in academia and the media as surprising and encouraging examples.

Goldlake is one of these ‘counter examples’, and shows that you have to break the barriers of your thinking to succeed. You are still in search of profitability – you are a business after all! – but you have to seek out alternative ways of doing things. A very simple way to start a sustainable business model is to look at any pain your business generates and then resolve it. This is good for your business and great for the community.

Teaching objectives

Our objectives were to:
  • Identify sustainability efforts in new venture development. Understand the interaction of management strategy and sustainability, stakeholder involvement and the interrelated impact of social and environmental sustainability on profitability.
  • Provide a strategic perspective of social and commercial value generation in gold mining, a highly controversial industry.
  • Examine how business model innovation can make social concerns integral and turn this into a competitive advantage.

Strategic decision-making

I think that this case offers students the opportunity to consider strategic decision-making with respect to commercial and social value generation and social responsibility. This is actually more complicated than it seems. The case helps students to understand the complexities associated with cultivating a sustainability initiative.

Goldlake’s ‘community first’ approach is a good example of how to implement social innovations. Goldlake exploits the power of social thinking and a community-centred approach. I hope this becomes a more traditional approach to business model generation.

Supporting material

Michael E. Porter and Mark R. Kramer’s article, Creating Shared Value, is useful reading, as is the website for B-corps. In addition, Goldlake uses the tools of design thinking and related resources such as those available at Stanford, which are very helpful.

Case details

Goldlake/Eurocantera Honduras
Ref BAB205C
Sinan Erzurumlu and Marty Anderson
Babson College
Assheton L. Stewart Carter
Goldlake Group
Also available:
Teaching note
Ref BAB205TN

About the authors

Sinan Erzurumlu is Associate Professor, Technology Operations and Information Management Division, Babson College, US
e serzurumlu@babson.edu

Marty Anderson is a Senior Lecturer, Technology Operations and Information Management Division, Babson College, US
e martyanderson@babson.edu

Assheton L. Stewart Carter is Sustainability Advisor, Goldlake Group
e asshetonstewartcarter@gmail.com

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