Wednesday 11 November was an enlightening day. I learned how DOW chemical transformed a $1bn investment into $5bn, and I came to understand why 88 percent of people would switch brands to a company with a cause.
The common denominator was a focus on sustainable growth – increasing shareholder value while decreasing an organizations environmental footprint.
The insights came from
AMRs Sustainability Exchange in Boston. There were over 150 attendees - people tasked with executing environmental initiatives within their organizations.
Dawn Vance of Nike talked about how they used a focus on the environment to innovate, integrate and mobilize efficiencies throughout their organization.
John Phillips of Pepsico talked about the need to change the physics of how you do business. As he put it, incremental change doesn’t help – you have to radically rethink how you do business. When you do that, as DOW chemical learned, you can make significant cost savings.
Think about it. We do many things purely because they have always been done that way. They’ve been handed down from one generation to the next. But who questions whether a process is still the most efficient? Who questions whether it still adds value?
Let’s take an example from Pepsico – rinsing bottles before filling them with Pepsi - a process that can use thousands of gallons a day. As many of you know, water is a scarce resource. Rather than work out how they could reduce water (incrementally), Pepsico decided to eliminate it completely. Such a radical challenge required a radical solution. And they got one – highly compressed, sterilized air. Now the bottles aren’t just clean, they are clinically clean - and not a single drop of water gets used.
This “radical” message was echoed at the World Resources Institute (WRI),
Courage to Lead dinner held in New York that same night. I was lucky to be one of the 350 guests that came to honor Dan Doctoroff, President of Bloomberg and Chad Holliday, Chairman of DuPont.
Both were being recognized as leaders who are tackling today’s toughest environmental challenges. As earlier in the day, both talked about the need to radically rethink how business was conducted. When the chairman or CEO of an organization declares that they will aim to reduce emissions by 80 plus percent - people take notice. At the same time, it takes great courage. Many believe that being kind to the planet is an expensive luxury. How on earth can you justify increased spend – particularly during a recession?
But as I learned from Dan the following day as he addressed the WRI’s corporate consultative group (of which SAS is a member), recessions or negative events are the best time to take on such a quest.
Bloomberg, as you might expect, is a very analytical company. They study the data. They look for trends, but most importantly, they look for opportunity. Over the last year, Bloomberg increased its workforce by 10%. History has proven that we always recover. But during the depths of such recessions, radical ideas emerge - ideas that transform a market.
The question is simple – do you want to be a follower or a leader?
During the good times, following may be a wise move – you can learn from others mistakes. But as Carl Schramm noted in
my book, recessions are where we make economies stronger coming out of the cycle. And when that uptick happens – it happens fast.
If you haven’t made the investments, if you aren’t “leading”, you may never catch up.
Gabor George Burt would say this is a perfect “Blue Ocean Strategy” - these companies are pursuing a differentiated strategy (pursuing environmental issues) while reducing their cost to operate.
Dan believes we are on the cusp of a revolution that will transform business. Sustainability and a focus on the environment are at the center of that revolution. From the stories and conversations I heard this week, I believe him. If DOW chemical can save $5bn through a $1bn investment, watch out competitors!
But again, it takes great courage to lead. Bloomberg is investing heavily around the environment – internally and in educating investors on the benefits – not just for the planet, but for the profit potential. There’s no short term tangible ROI for the education piece – but if Dan is right, once the tipping point tips – the rewards will come and Bloomberg will have helped many others see the light. It takes courage to lead.
For more on SAS’ own experiences, check out our
CSR report and evaluate how our
software can help you identify, then prioritize your sustainability initiatives based on facts, not assumptions.
I’m Jonathan Hornby, a marketing director at SAS focused on Performance Management. This is my blog for discussing news stories that capture my attention and get me thinking about how they will influence tomorrow’s business strategies.
Radical Action presents ten respected thought leaders and their ideas for business success. Taken together, the strategies can help any organization succeed, regardless of the state of the economy. All royalties from the book are being donated to children’s cancer research.
