Archive for 2009

As sustainability spreads, customers want numbers

After years on the business fringe, life cycle assessments are moving closer to the mainstream as sustainable practices spread. The trend signals a growing customer desire to see and compare the numbers behind marketers’ claims of sustainability.

Last week Deloitte Consulting, a decidedly mainstream business, released a new whitepaper, “Lifecycle Assessment: Where is it on your sustainability agenda?” Joel Makower refers to the paper in an excellent article on the “renaissance of lifecyle thinking.” An LCA, Deloitte says, “charts the course of all inputs and outputs, and their resulting environmental impacts for a given product system throughout its lifecycle.” The paper’s authors write:

Sustainability is now widely accepted as a core business issue rather than a passing fad. However, particularly in light of the current downturn, many stakeholder groups are no longer satisfied with vague assertions that green is really ‘gold,’ or that green products are in fact better for the environment. Customers (both businesses and consumers), investors, environmental interest groups, and governments are pressuring companies for enhanced quantification of environmental impacts.

This increased external demand is fueling the use of LCAs. Clearly, Deloitte sees a business opportunity in helping its clients produce them. Nevertheless, Deloitte’s paper echos the themes of author Daniel Goleman in his new book, “Ecological Intelligence,” which I wrote about in a previous post. Goleman cites LCAs as the data backbone for emerging online services that enable businesses and consumers to make purchase decisions based on hard numbers for the environmental (and in some cases, social) impacts of a product.

Although the early LCAs date back to the 1960s, Goleman describes how far they have come in sophistication and detail:

Never before have we had the methodology at hand to track, organize, and display the complex interrelationships among all the steps from extraction to manufacture of goods through their use to their disposal—and summarize how each step matters for ecosystems, whether in the environment or in our body.

Deloitte cites several marketing and communications benefits for companies employing LCAs. Besides supporting marketing claims about a product’s “environmental friendliness,” it can enhance a company’s reputation:

LCA can demonstrate that a company has moved beyond surface-level sustainability window-dressing to a deeper commitment to improved environmental impact…However, as LCA becomes more common, it will no longer serve as a differentiator in itself; it is the actual results—and what they say about a company’s environmental progress—that will matter to stakeholders.

LCAs can be complex and costly to produce. This puts them out of reach of most smaller producers and manufacturers. Deloitte says these and other firms may want to consider an LCA “lite” approach that is less data intensive.

LCAs are not appropriate for every business, but there’s an underlying message for marketers in their widening use. “Becoming sustainable” and “going green” are well past the sloganeering stage. More customers and other stakeholders are asking for quantifiable progress. So before you make that next sustainability claim, you’d do well to have the numbers to back it up. Only your competitors will be unhappy to see them.


Five questions your business should be asking

My business inspiration today comes from an unlikely source, Palestinian Prime Minister Salam Fayyad.

Tom Friedman, in his latest New York Times column, credits Fayyad for his leadership in improving conditions in the West Bank. Here’s the part I like. Freidman quotes Fayyad about his approach to governing: “tell people who you are, what you are about and what you intend to do and then actually do it.”

Those are words to live by as a politician. I could imagine them coming just as easily from the mouth of an effective business owner or executive. Fayyad’s simple philosophy can instruct any of us in business, especially after an unforgivable period of corporate excess and ethical lapses have left so many of us staggered, angry and jaded. In this environment, opportunity lies with businesses that act with higher purpose and integrity — the ones that keep their promises.

Here are five questions every business ought to be asking (and answering) today:

  1. What is my business ultimately pursuing? For many companies, the honest answer to this one is maximum shareholder return or more sales or more profits. The pursuit is financial. Not that there’s anything wrong with that. But it’s worth asking, is financial success really what you want the measure of your business to be? Or is money  only an enabler, making it possible to pursue a larger social or environmental vision?
  2. What is my business trying to accomplish? I’ve heard vision described as something to be pursued and mission as something to be accomplished. I like that distinction. For example: “We pursue clean, fresh water for all. Our contribution to this effort is producing low-cost, long-lasting water purification systems for individuals.” I also think of mission as the reason a business exists. We exist to accomplish something. What is that for your business? Is your purpose clear? Does it inspire you and your employees and customers?
  3. What do we promise? Ask yourself what you want every stakeholder — customer, employee, supplier, partner, investor, community citizen — to experience from your business. This is an experience you strive to create for everyone, at all times. It’s what you stand for, the essence of your business. It’s what keeps customers returning and employees staying. And it can’t be taken lightly. As Fayyad has demonstrated, doing what you say you’ll do can have profound impact.
  4. What makes us different? So you’re clear-eyed about the difference your business is trying to make and the experience you want others to have of your firm. The question now is where that places you versus the businesses competing directly or indirectly for the customers and other stakeholders you’re targeting. Study your competitors and what others are saying about them. Ask customers and others what makes your firm different. If you don’t like their answers, you have some work to do.
  5. What makes us relevant? A company may have the distinction of producing the world’s only sustainably made, solar-powered 8-track player, but, really, who cares? Sure, the business is different. It’s also irrelevant! The key is to be distinct and relevant. What do your stakeholders most value about your firm today? Do you matter to them in important ways or only superficially? Survey them to find out.

My work is helping businesses wrestle with these  fundamental questions. It’s far more than a marketing or branding exercise. My clients establish their firm’s reason for being and core identity. They give purpose and direction to the decisions and actions of every individual and group within their company. Best of all they put themselves in position to make a difference — “and then actually do it.”


New discussion course for business sustainability

Sustainability is a huge topic. And many feel it lacks a clear definition. No wonder so many businesses that want to do the right thing don’t know how or where to start down the sustainability path.

Enter the nonprofit Northwest Earth Institute, based in Portland, Ore. NWEI has answered the call of businesses and other organizations looking for a way to start — or perhaps kick start — sustainability initiatives. NWEI’s response is a new discussion course designed specifically for the workplace, called “Sustainable Systems at Work.”

In the interest of full disclosure, I am on the NWEI board. As someone who’s participated in previous NWEI discussion courses, I can vouch for the power and inspiration in the model of peer group learning used by NWEI.

Each of NWEI’s courses takes a grass roots approach to sustainability, consistent with the Institute’s mission of “Inspiring people to take responsibility for Earth.” The previous seven courses offered by NWEI are designed to inform and inspire people in support of individual behavior change. The new workplace course is tailored to empower groups of employees at all levels to create or support sustainability projects or programs within their business. This bottoms-up approach creates employee champions for sustainability, as well as employee buy-in for environmental or social initiatives already in place.

Over a course of five sessions (60-90 minutes each, typically one session per week), employee groups will:

  • evaluate the current economic model and consider the case for change
  • examine the concept of sustainability from an organizational perspective
  • evaluate principles and frameworks for guiding a vision
  • identify tools and strategies for implementing a framework
  • develop an action plan to advance organizational change

The course book, produced in cooperation with The Natural Step Network, contains articles and excerpts from experts and authors on business and workplace sustainability. The readings and companion discussion questions and exercises are designed to move employees quickly from learning and conversation into action. Mike Mercer, executive director of NWEI, says it’s all about engaging employees from the ground up.

Most organizations are launching sustainability initiatives from the top down, which they should. However, for culture and practices to change within an organization, employee commitment is a must. We believe innovation at its best occurs at all levels, and is driven by shifts in thinking. Our programs drive just that.

So if your business or some business you know is looking for a door into sustainability or the key to unlocking employee passion for sustainable change, get in touch with NWEI. They can help.


Where being tough meets doing good

Alysa Rose, president of Rejuvenation, could feel the culture of her company drifting a couple years ago. She could see it in the lost sense of urgency, and she could hear it in the voices of her employees.

“The most heartbreaking quote I heard from an employee, a relatively new employee, was: ‘When I got offered a job at Rejuvenation, a friend said, Well that’s great. Once you’re hired at Rejuvenation, you’re never fired.’ And I thought, wow, that’s not what a healthy culture is about. It’s about people contributing and making the business stronger and being accountable for that.”alysa_rose_leadership2

I spoke with Alysa a couple times earlier this month as part of a series of interviews I’m planning with leaders of sustainable, privately owned businesses to gather and share an inside look into operating a triple-bottom-line business. It’s important to understand that Rejuvenation has a well-deserved reputation for its socially responsible business practices, built painstakingly since its founding in 1977. Based in Portland, Ore., the privately held company is America’s largest manufacturer and leading direct marketer of authentic reproduction lighting and house parts. It goes to great lengths to minimize its impact on the environment and support the causes that contribute to livable communities.

In the circles of corporate social responsibility, “doing well by doing good” is practically a business mantra. And under the leadership of Alysa and founder/owner Jim Kelly, Rejuvenation knows what it means to do good and to do well. But as Alysa’s experience in her business demonstrates: Doing good socially and environmentally does not guarantee financial success.

“It’s important to be very clear-headed about it all. You can’t do good unless you’re making money. You’ve got to make money. That’s where you have to start. You have to have an exceptional business plan that drives profitability. Because if you want to give back you have to have a base to give back from. It’s hard enough to run a good business; complicate it by being mission-driven or values-driven and you’ve got to have a damn good business model. I think that’s why Rejuvenation is successful.”

Ass on the line

Alysa and Jim know the importance of profitability; unfortunately, as became evident in 2007, too few managers and employees in their company were as clear-headed on the financial front.

“People really wanted to work at Rejuvenation, not because they were excited about contributing to our growth and profitability, but because we had a reputation for treating everybody so well and they wanted to come along for that ride. It was out of balance. Our performance started suffering.”

That’s when Jim and Alysa added a seventh core value, sans sugar coating. They called it “ass on the line.” They considered calling it accountability but decided that sounded too “corporate” and easy to dismiss. To drive home their message, Jim and Alysa met with every dinning_room_hathwayemployee in small groups and made it abundantly clear what would be expected of them going forward.

“We asked them to make a commitment. I said, ‘Don’t take this lightly. Take this in. Go home. Think about it, talk about it with your loved ones and make a commitment whether you want to be here or not.'”

As it turns out, some employees and managers were uncomfortable with the much higher expectations of accountability and decided to quit. In hindsight, Alysa says, she and Jim could have presented the information in a less threatening way, “but we are in a much better place now.”

Having halted the cultural drift before the recession took root proved fortuitous. “I can say we are leaner, and we are tougher and quicker,” Alysa says. That has left the company far better equipped to ride out these tough times.

When values collide

While “ass on the line” has had its desired effect in building financial accountability, it doesn’t mean social and environmental responsibilities are any less important at Rejuvenation. When values collide, as they frequently do, Alysa’s team takes the challenge head on.

“The point is we have those discussions. Does it add complexity? Yes. Does it add a degree of difficulty? Yes. Does it add time in most situations? Yes. And that’s just how it is. And I think it’s a struggle for some. I think it’s a struggle for business managers who come from a more straightforward environment. And it might be a little more complex for employees. But it’s also much more rich.”

While the company has worked hard to integrate “ass on the line” into its culture, Alysa says it’s not the company value she holds closest.

“Of all our values, ‘goodness’ is the shortest one. That’s the one that gets me up in the morning. If you’re going to dedicate your life to something or even a few years to something, you want to believe that doing it is going to leave the world a better place. So the goodness is that the world is a better place because Rejuvenation is here. We employ people. We provide great products. We preserve old buildings. We give back to our community financially. We educate our employees.”

And they teach the rest of us in business: Sometimes you have to be tough to do good.


Marketing in a world of eco-intelligent consumers

Many marketers don’t feel obligated to know or otherwise take responsibility for the entire environmental and social story of the products they help develop, promote and sell. If they’re not careful, their customers may know the full story before they do, leaving them with a potential sales and reputation mess to clean up.

Daniel Goleman, author of the popular book “Emotional Intelligence,” explains the growing empowerment of eco- or social-minded shoppers in his new book “Ecological Intelligence: How Knowing the Impact of What We Buy Can Change Everything.” Goleman says consumers face an information gap that prevents them from easily knowing and comparing the personal, social and environmental health impacts of individual products they are considering for purchase. That gap, however, is closing, thanks to the emergence of new mobile and point-of-purchase information technology that makes it easier to access the accumulating ecological and social data and ratings of individual products.

The hope and the promise Goleman sees for these new forms of IT is “radical transparency.”

Ecological transparency becomes radical when its analysis encompasses the entire life cycle of a product and the full range of its consequences at every stage, and presents that information to a buyer in ways that demand little effort…Radical transparency means tracking every substantial impact of an item from manufacturing to disposal—not just its carbon footprint and other environmental costs but its biological risks, as well as its consequences for those who labored to make it—and summarizing those impacts for shoppers as they are deciding what to purchase.

Goleman credits the company GoodGuide for its pioneering efforts to equip the shopping public with “comprehensive and rigorous information at the point of purchase.” GoodGuide’s technology platform is still in beta form, but it shows potential for dramatically tilting the information playing field in the direction of the consumer. According to Goleman:

GoodGuide surfaces a product’s backstory. It can calculate the specific environmental impacts during manufacture, transport, use, and disposal. It can perform this calculation down to a single chemical among a batch of ingredients. On a macro level, it can rate how well a given company stacks up against others in its field on environmental, health, or social performance, as well as determine which brand or company has been getting better over time. GoodGuide can evaluate a company’s policies, its disclosure of key information on products, and ultimately a company’s impacts on consumers, workers, communities, and the environment.

And now GoodGuide offers a free iPhone app that provides mobile access to data on more than 70,000 products, according to its website. Goleman says GoodGuide has harnessed decades of industrial ecology research to provide precise metrics of various processes and products. Perhaps most significantly from a marketing standpoint, “GoodGuide cuts through greenwashing to the underlying facts,” Goleman says.

Although GoodGuide remains at beta stage, Goleman says the tool is nonetheless “a concrete example of how radical transparency might work” in the aisles of shoppers’ favorite stores. It may be a Microsoft or a Google that ultimately provides the transparency system that is most widely accepted. In any case, Goleman sounds confident it won’t be long before consumers have fast, convenient access to information that helps them align their purchases with their values at the place and time they’re ready to buy. I share his confidence.

For marketers, the takeaway is this: Your customers will eventually have all the credible facts they need to decide whether your company or product satisfies their health and sustainability values and how you compare to your competitors. At that point, you’ll have little choice but to ensure the stories you tell about your company and products square with the facts your customers will have at their fingertips. Do you know your products’ “environmental impacts during manufacture, transport, use, and disposal” down to a single chemical used in its ingredients? And how about the labor and trade conditions up and down your supply chain? It’s only a matter of time before not knowing or not caring to know that information will come back to bite the offending company either in lost sales or in damaged image.

The “radical transparency” Goleman describes won’t appear overnight and it may never be fully realized in the market nor embraced by the consumer, but the information trends are clearly working in favor of the customer, whether a business or an individual. One of the trend drivers is demographics. In an interview last month with public television’s Bill Moyers, Goleman said he believes the younger generations have the greatest motivation to preserve the world and their ever-expanding use of social media will accelerate the sharing of consumer knowledge. This, he says, will create a shift “that will make it not only feasible for companies, but actually essential for companies to do the right thing.”

Smart marketers will get ahead of the trend and make radical transparency their competitive advantage.

Update: As I was about to publish this post I came across Joel Makower’s review on June 17 of Goleman’s book. He isn’t nearly as optimistic as Goleman about the transformative potential of radical transparency, for either consumers or producers. “I can’t argue with the premise, but my 20 years of watching the green marketplace leaves me, well, unsold,” Makower writes. Goleman responds to Makower here. He says, “I don’t believe the last 20 years offer apt data points for projecting the next 20. It’s the future I’m talking about, not the past.” I’d suggest you read the book and decide for yourself.

Update: Daniel Goleman references my post in a piece he wrote for Harvard Business here.


Looking for the brand among all the branding

I left a day-long conference on branding this week inspired in several new directions. But I couldn’t shake a nagging question: In our fascination with the new tools of branding are we forgetting what we’re supposed to be building—namely, the brands of our businesses?

I found inspiration in the material of several speakers who persuaded me the latest mobile devices we otherwise call cellphones are a cultural game changer. I don’t think it’s a stretch to say their impact will be as great as radio, television, personal computers and the Internet were when they emerged on the scene. I understand why marketers are salivating at the prospect of turning these smart devices into conduits for branding and promotion. The conference also deepened my appreciation for the branding possibilities of social media. One presenter says they’re transforming our customer dialogues into “multilogues.”

Lost in all the buzz this conference and others like it generate around mobile and social media and other leading-edge branding techniques is the brand itself. We seem to be taking the brands of our businesses for granted. We assume our businesses have a clear, shared understanding of what we stand for and what makes us different and relevant. So rather than concern ourselves with the basics of the brand, we obsess over how to use the hip branding tools du jour, such as Facebook, Twitter and iPhone apps.  

As marketers, we can’t afford to confuse branding with the brand itself. Branding is doing, brand is being—it’s who we are as a business. It’s easy to let the doing of marketing consume us, especially when there are far more cool ways to connect with customers than ever before. We get into trouble when our eagerness to deploy compelling technology blinds us to why we exist and who we are as a business or brand. These fundamental questions of being are unchanging, whether for humans or for human organizations. They’re also questions many businesses and marketers avoid. They require a period of introspection and reflection that many businesses feel they can’t afford. They’re moving too fast, they tell themselves.

Or perhaps the existential questions of purpose and meaning make us uncomfortable—what if we discover there’s no there there in our business? So as marketers we busy ourselves with the doing, the branding. And we add the likes of Twitter, Facebook and mobile marketing to the still unfinished business of perfecting blogs, websites, webinars and other digital channels. We end up building brands in the way improv artists make up the story as they go along. The process may be entertaining, but the resulting brand is purely random.

In the immortal words of Yogi Berra, “If you don’t know where you are going, you’ll probably end up someplace else.”