Archive for the ‘Business & Economics’ Category
Ambition, not patience, the operative word at Nau
I only knew my hometown sustainable clothier Nau by what I read and saw in the media. Sadly, they closed their doors so fast I didn’t have a chance to buy any of their clothes. I suspect they would have been right up my alley.
Even though I didn’t really know Nau, something about them seems very familiar: venture capital. Or more precisely, reliance on venture capital. I spent more than 20 years in high tech. Venture capital is the lifeblood of most tech startups.
Venture capital, however, is not patient capital. Most VCs are seeking to make their money back plus a handsome profit within three to five years, usually by selling to a larger company or going public. Nau had reportedly raised $34 million since its founding in 2005. Its inability to close another round of financing led the company to shut down last week.
Nau was in many ways the perfect candidate for venture capital. They had name-brand management, an incredible commitment to innovation and ambition as outsized as any venture capitalist. The media took notice. Fast Company reported in June 2007, “The business plan projects $11 million in revenue this year (2007), growing to $260 million and 150 stores by 2010.” Nau CEO Chris Van Dyke told the magazine:
“We’re challenging the nature of capitalism. We started with a clean whiteboard. We believed every single operational element in our business was an opportunity to turn traditional business notions inside out, integrating environmental, social, and economic factors. Nau represents a new form of activism: business activism.”
In the end, none of that was enough as Nau could not survive in the suddenly tight-fisted capital market. Its plan to grow to $260 million in revenue by 2010 clearly required a constant stream of capital.
Having seen this story line play out over and over in high tech (especially in the dotcom era), I’m hardly surprised by Nau’s fate. I only wish the universe would have rewarded Nau for its commitment to doing the right thing for Earth and its inhabitants.
Some day soon, I hope to be reading case studies of what the Nau founders could have been done differently. Maybe these study authors will answer the question uppermost in my mind: Should Nau have hitched its wagon to the race horse team of VCs or reined in its ambition to change the world overnight and settled into a trotting pace that could be sustained indefinitely?
Even more than financial capital, patience is in short supply in business. I understand the world needs big, audacious ideas like Nau’s to meet the urgent social and environmental needs of our time. But it seems to me there’s a lot to be said for thinking big — and starting small.
Tags: ambition, Nau, starting small, Sustainability, VC, venture capital
Posted in Business & Economics, Oregon, Sustainability | 1 Comment »
Painful choices along the path of sustainability
Imagine for a moment you’re an executive for a fertilizer company. And let’s say you have a genuine commitment to the triple bottom line: people, planet, profit. Worldwide demand for fertilizer is off the charts, so that’s good for your company’s finances (profits). You sell a terrific product that dramatically increases crop yields, making a meaningful contribution to the world’s food supply (people) and to increased biofuel production (planet).
End of story, right? Well, not exactly. A New York Times article on the worldwide fertilizer shortage gets at some of the potentially agonizing tradeoffs in following a commitment to sustainability.
First, the good (taken from the article):
“Putting fertilizer on the ground on a one-acre plot can, in typical cases, raise an extra ton of output,” said Jeffrey D. Sachs, the Columbia University economist who has focused on eradicating poverty. “That’s the difference between life and death.”
And now the bad:
Environmental groups fear increased use, particularly of nitrogen fertilizer made using fossil fuels. Because plants do not absorb all the nitrogen, much of it leaches into streams and groundwater. That runoff has long been recognized as a major pollution problem, and it is growing. A barometer of the pollution is the rising number of dead zones where rivers meet the sea. In the Gulf of Mexico, for instance, nitrogen runoff from fields in the Corn Belt washes downstream and feeds plant life in the gulf. The algae blooms suck oxygen from the water, killing other marine life. More than 400 dead zones have been identified, from the coasts of China to the Chesapeake Bay, and the primary reason is agricultural runoff, said Robert J. Diaz, a professor at the Virginia Institute of Marine Science.
You’re the fertilizer executive. With one hand you’re helping to eradicate poverty, plus you’re creating good jobs in your company because your product is in such high demand. With the other, you’re helping to destroy marine life and adding to greenhouse gas emissions because of the fossil fuels required to make a usable form of nitrogen.
My in-laws and their ancestors have been farming in Oregon since the 1850s. I remember my mother-in-law saying awhile back that it wasn’t until chemical fertilizers came along in the 1950s and 60s that they were able to move out of pure survival mode. For them, it meant the difference between a family farm that remains in operation today and one that would have long ago been plowed under.
I believer her, and I still wish the runoff from agriculture wouldn’t find its way into the murky Willamette River running through my hometown of Portland.
I understand why the financial bottom line rules in business. Who really wants to confront the choice of feeding the poor or destroying ecosystems?
Tags: fertilizer shortage, New York Times, Sustainability, triple bottom line
Posted in Business & Economics, Sustainability | No Comments »
Another attack on Wal-Mart’s green claims
Earlier this month, I asked the question, “Is a green Wal-Mart good enough?” Author and big-box retail critic Stacy Mitchell certainly doesn’t think so. In a post for Beacon Broadside last Friday, Mitchell says, “The best case scenario for Wal-Mart’s sustainability initiative is to make a highly polluting operation somewhat less so.”
She dismisses most greenwashing efforts as “clumsy and transparent,” but acknowledges that Wal-Mart is different. The company, she says, “has developed a far more sophisticated, and ultimately much more dangerous, approach to manipulating environmental sentiment for its own expansion and profit.”
Thanks to Jessica at Beacon Broadside for the heads up.
Tags: Stacy Mitchell, Sustainability, Wal-Mart
Posted in Business & Economics, Marketing, Sustainability | No Comments »
Greenwashing companies aren’t the only villains
Nothing like Earth Day to focus attention on greenwashing.
The Center for Media and Democracy, no fan of the PR industry, is a good example. Its authors define greenwashing as “the unjustified appropriation of environmental virtue by a company, an industry, a government, a politician or even a non-government organization to create a pro-environmental image, sell a product or a policy, or to try and rehabilitate their standing with the public and decision makers after being embroiled in controversy.” A bit wordy, but sounds about right.
An East Coast PR executive cites a study by TerraChoice, an environmental marketing firm, that found 99 percent of the 1,753 claims of green consumer products they recently reviewed were “guilty of greenwashing.”
As prevalent and disturbing as greenwashing is, many in the media and environmental groups may be too focused on the actions of those who want us to believe they are doing some good for the Earth, when they’re really not. I’m equally disturbed by the vast numbers of businesses that make no effort or claim to be green. Some of those guilty of greenwashing are at least trying to improve their practices. Wal-Mart, for example.
I can’t cite statistics, but I would wager that most businesses have still done little or nothing to become more Earth friendly. Instead of spending inordinate time fact-checking green claims, we should be urging, cajoling or, if necessary, shaming offending businesses into cleaning up their acts. Not to defend greenwashing, but companies that make green claims open themselves up to public scrutiny. That’s more than can be said for the green-avoiding majority who are happy no one’s asking them the hard questions.
Tags: Earth Day, green claims, greenwashing
Posted in Business & Economics, Climate Change, Communications, Marketing, Sustainability | No Comments »
Shopping ’til we drop on Earth Day
Earth Day is nearly here. Just in time for retailers and producers to stoke the consumption of all things green and revive their flagging fortunes in today’s tough sales environment. Advertising Age (reg. required) asks, “Is Earth Day the New Christmas?”:
As April 22 approaches, marketers of all stripes are bombarding consumers with green promotions and products designed to get them to buy more products — some eco-friendly, some not so much. And while that message seems to contrast with the event’s intent, the oxymoron seems to have been lost on marketers jumping on the Earth Day bandwagon in record numbers. This year it seems that just about everyone has found a way to attach themselves to what is fast becoming a marketing holiday that barely resembles the grass-roots event founded in 1970.
Leave it to American commerce to dress up consumerism on a day that is meant to remind us of the harmful effects of excessive and inequitable consumption. If business and industry wanted to make a sustainability statement, they would close up shop on Earth Day and challenge us to buy less and give more. Oh wait, isn’t that what Christmas is supposed to be about?
Tags: Advertising Age, Christmas, Consumerism, Earth Day
Posted in Business & Economics, Consumerism, Marketing, Sustainability | No Comments »
Is a green Wal-Mart good enough?
By now you’re probably aware of Wal-Mart’s efforts to green its business practices and its image. If you haven’t, you probably will soon. The company that a business professor I recently met called the 13th largest economy in the world has launched an advertising onslaught tied to Earth Month. According to Wal-Mart’s news release, its national advertising campaign includes print, television, radio and online ads and a 16-page insert in May issues of several consumer magazines. Brandweek says the company calls it “the most comprehensive environmental sustainability campaign” in its history.
No less of an environmentalist than Paul Hawken, speaking at his book-tour event in Portland last year, said Wal-Mart was indeed serious and sincere about sustainability. The professor I mentioned supports Hawken’s assessment. She is among a group of academics taking part in Wal-Mart’s green initiatives and is a regular visitor to Wal-Mart’s home in Bentonville, Ark. The company’s new-found green zeal is apparent on its website:
Wal-Mart’s environmental goals are simple and straightforward: to be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain our natural resources and the environment.
What to make of all this? This is Wal-Mart we’re talking about, the company so many, including me, have good reasons to despise. I’m on the board of a Portland nonprofit that actively supports locally owned, independent businesses and encourages people within our community to do the same. This in the face of out-of-town big-box retailers — Wal-Mart being the poster child — that have decimated so many local independent businesses and left their communities poorer for it.
Still, if Wal-Mart — given its staggering size — is successful in using only renewable energy, producing zero waste and greening its supply chain and the products it sells, it would have an enormously positive impact on the global environment. Or so it would seem.
Something, however, doesn’t add up for me. Green or no, Wal-Mart hasn’t backed off using low prices to beat its competition (including the Mom & Pops in your town). The message it’s sending is you can have it all. “Save Money. Live Better.” — it’s new slogan promises. Wal-Mart will drive its suppliers to go greener, but it will still expect the lowest possible prices from them. That protects its profit margins and enables its customers (in theory) to save money. But someone or something has to pay for Wal-Mart’s margins and our low prices — as has always been the case.
What do you think? If Wal-Mart achieves its environmental sustainability goals, will it have earned your admiration, maybe even turned you into a customer? Is going green enough? Or do you, like me, view sustainability as far more than going green? What about the matters of social and economic equity? Wal-Mart’s lower prices and business practices mean lower wages, loss of independent businesses and the community diversity they bring and the leakage of dollars out of local communities and into the coffers of Wal-Mart headquarters. Should we just chalk that up to the free market doing its thing?
Tags: Brandweek, Earth Month, economic leakage, equity, Paul Hawken, Sustainability, Wal-Mart
Posted in Business & Economics, Consumerism, Marketing, Sustainability | 1 Comment »