Turning Green into Gold
by Boris Pluskowski
It wasn’t that many long ago that friends and clients who have known me for a while, would start giggling when asking me a question on the topic of green innovation.
In part I think this was because of my reputation for doggedly insisting that companies focus exclusively on value creating activities – something that has always set myself firmly apart from so many others in the innovation space – and partly because they like to hear my rant on the history of how Sustainability became a respectable corporate pursuit – a “highlight” of a conference presentation I gave a few years ago.
In that “history” I detailed an amusing, but logical, development path starting with the originators of the true green movement (tree-hugging hippies from the 60’s..) and charting the development of that movement alongside the development of what’s become the modern day green agenda. Interestingly I think you can match the way corporate environmental programs gained credibility with the career development of these 60’s kids:
The argument went something like this:
- Kids – taking too much acid, hugging trees, and getting nothing in return but tree burns and bad hangovers. Hate big companies.
- Corporates – green? What green dept? Are you smoking something?
- Kids – now split up into two groups – the activists who decide to sober up and provide a more organized resistance to the destruction of the environment ; and their colleagues who realized they finally needed to get a job (usually at one of those hated big companies) in order to pay for their college loans who then start financing the activists (hence the flourishing of organizations like Greenpeace)
- Corporates – with the influx of a new generation of workers, comes a changing culture. The kids joining the workforce bring with them an acute awareness of the environmental effects that starts to pervade the company they join. Some of these kids even land roles in fledgling corporate environmental departments; but they’re not really taken seriously, are generally underfunded and ignored by the older controlling generation and thus their activities are reduced to minor programs like introducing recycling programs next to photocopying machines in their organizations. Regardless of any benefit they bring in, these departments are still generally regarded as cost centers.
Now reaching middle/senior management positions in the big corporates they joined, the kids are finally in a position to mandate some the environmental morality they’ve carried with them from their youth. However, you don’t get to senior management without having developed an acute sense of business profitability – so whilst departments are formalized and programs are funded – they are done so on the condition that they contribute to overall company profitability. Programs focus on becoming better Global Citizens, finding Eco-efficiencies, Sustainable Ventures to ensure the next generation of products can be built, and responding to the overall global increase in the consumer demand for green products and industry(corresponding to the rise in 60s kids with disposable income! In fact, even today, despite the cost pressures of the current economic market, “environmentally friendly” still ranks as the #3 consumer priority behind “Price” (#2) and “Ability to do the job” (#1)). Sustainability and innovation offices of corporations are no longer seen as a cost center, but a potential profit center.
Likewise for their activist counterparts who have now realized that they’re getting too old to be chasing Japanese whaling ships around the Pacific and vain attempts to stop developed countries from testing nuclear weapons (“that shit gets dangerous dude”) – and have now set about embracing the overwhelming entrepreneurial spirit of the times to start up and develop new companies either providing new green products and services.
With most of the 60s kids now in senior mgmt positions and corporate sustainability offices well established; they embark on the next phase of development – using Green as a platform from which to innovate – either by using it as a competitive differentiator, using nature as inspiration for innovative directions, or developing new breakthrough business models that exploit ecological factors. At this point, the sustainability and innovation offices of corporations are no longer seen as cost centers nor profit centers, but rather as a source of competitive advantage.
Whilst there was more than a touch of cynicism, and a fair dose lot of tongue-in-cheek in that history – there was also, in my mind, a lot of truth in there too, and it served well to ridicule managers still stuck in yesteryear with regards to their attitudes to corporate green initiatives.
For whilst there are some wonderful ecological, philanthropically, and social reasons for advancing a corporate green agenda – what’s actually making these things possible and viable from a corporate perspective – is the changing attitude of today’s Sustainability Executives who understand that a solid “Green” Strategy relies on focusing on activities that make the company solid “Gold” so to speak.
Whilst we would like to think of companies as being capable of selfless activities to make a better world for our children, avoid climatic, social, and economic doomsday scenarios, and generally reduce the impact that they have on this big blue cosmic marble we all inhabit – the truth is that they do this most effectively, with the most conviction, and with the most impact, when those activities have an impact on the bottom/top line too.
You can call it a cynical observation on a capitalist society if you wish, but I simply call it a realistic observation on what really motivates companies to act and react in the modern era.
The good news though is that Green IS an issue that can drive just this type of impact – in many different and valuable forms – and if you’re looking to drive a successful green program – it’s crucial that you focus on this in order to be allowed to operate freely.
By now I’m sure you’re saying – “ok, ok – enough rhetoric Boris!” – so here’s some meat for you. I spent a year going to multiple conferences, spoken to the sustainability arms of several large companies, and even attended a World Economic Forum event on sustainability as an “innovation expert” – and found myself developing a model that offers a comprehensive strategic formula for directing an innovative green agenda.
You start by considering the 4 key elements that a company consumes and produces:
Although your company may not use/produce every single one of these elements; they constitute the backbone of a comprehensive environmental agenda (ps, proper attribution for the four elements has to go to Nike, who first introduced me to this elemental concept). The idea is to then take each in turn (or combinations of the four and think about all the possible things you can do to them (always with a view to adding/contributing to company profitability):
- Reuse/Recycle the element
- Replace the element from your production cycle
- Reduce the amount of the element you use/produce
- Look for ways to increase your Revenue/utilization rate of that element
- Nike defines waste as “anything that doesn’t end up in the consumer’s closet” – the annual value of the waste they throw away amounts to an incredible $844,000,000 per annum – so finding even a manner to reduce waste by 1% can lead to significant financial gains
- Several of the major superstores of one retail giant in the Southwest of the US have invested in covering the roofs of their stores with solar panels with the result that they not only are they reducing the amount of energy they’re consuming from the national grid; some stores even found out they were able to generate a surplus of energy which could be sold back to the grid, providing them with a new form of revenue.
- UPS made headlines a few years ago when they rerouted their delivery routes to eliminate left hand turns – significantly reducing the amount of time their trucks spent idling waiting for a red light (For international readers, in the US, drivers in many states are allowed to make right hand turns on a red light). UPS also introduced a system whereby in certain cities with tight parking or narrow streets (like New York City for example) the driver will park his truck once in a central location, and then delivers smaller packages to the local area by bicycle instead. Whilst these seem like very green initiatives, they also increase efficiency, and reduce fuel expense – a double whammy for UPS!
Finally – once you’ve considered the various angles offered to you by the model for your own production and consumption – start looking at how you can apply the model to both your inputs and outputs. Are there ways you can reduce the waste in products you source other companies by asking them to reduce the amount of packaging they use (maybe you can negotiate a better price in exchange for the savings you’re creating for them); or can you sell your waste products to someone else to reuse (creating a new revenue stream, whist also reducing waste); or maybe there’s a more efficient way to deliver your products to your customers (Think about how Apple didn’t even include a DVD drive with their MacBook Air line – instead suggesting that clients download all the software they need instead – reducing packaging, material cost and improving customer service and margins all in one go – not to mention better target the “road warrior” clients for whom light weight and high style are super important buying factors).
I’m excited to see where the next generation of environmental agents takes the corporations of the future – for the next stage of environmental innovation is upon us – and that HAS to be good thing! Go forth and be green everyone!
In the meantime – please feel free to add in your own green stories and examples in the comments section below – I’d love to hear from you all!
Boris Pluskowski is the Founder of The Complete Innovator where he regularly shares new ideas and best practices on how big companies can harness Innovation, Collaboration and Social Media to drive new sources of value throughout the enterprise.