Stakeholders: Consumers Archives

July 11, 2007

Implications of Live Earth (Hello Consumers)

It was hard to miss the hoop-la around Live Earth, the mega-concert on all seven continents on 7.7.07. I'm not sure if they really hit the two billion viewer mark (seems hard to measure that), or what the long-term impact of Live Earth will end up being in reality, but Al Gore did declare it the "largest global entertainment event in history." I do know that my 70-year-old parents went out and bought bulbs and started unplugging cell phone chargers. So let's just say it was a big deal.

I didn't watch the entire coverage, but saw plenty. By and large, it certainly can't hurt and may do a lot of good. It won't add much to the discussion for me to pontificate on whether this thing matters, works, etc -- many other voices will cover that. Instead, here are some reactions with an eye toward what the business world can learn or look out for

The pledges. Gore raised his right hand (I thought he might pledge to defend the constitution ) and asked everyone to join him in saying seven pledges (which, by the way, were not that easy to find online). Besides the ones that have obvious impact on specific industries (a moratorium on coal-fired power plants!), the last one was really interesting:

"I pledge to buy from businesses and support leaders who share my commitment to solving the climate crisis and building a sustainable, just, and prosperous world for the 21st century."

This is asking consumers not only to understand whether the companies they buy from are green and ethical, but whether their lobbying efforts and political donations are supporting green-minded leaders. I have no idea how people are supposed to figure this stuff out on their own since the information on that is incredibly hard to put together. But the pledge itself is fascinating: it's a newer, larger definition of what consumers as stakeholders can and should demand. Also, it may point to an opportunity for companies that have nothing to hide, can use transparency to their advantage, and can tell a well-founded story about their full environmental impacts and what they're doing about them. What a great chance to build customer loyalty.

"Small steps" I don't know if there were talking points but everyone from Sting to Mayor Bloomberg to Rosario Dawson were in synch -- every little thing you do can help (or perhaps every little thing you do is magic?...sorry Police fans). But like my parents, millions of people will be looking for small ways to reduce their environmental footprint. Companies that can provide solutions will do well.

Language and imagery. One criticism: there was still a lot of "save the planet" talk. Sorry to be cynical, but the environmental movement has been using that language for decades and failed. We need to talk about saving ourselves, our economy, our way of life, etc. And they kept showing the curly-Q compact fluorescent bulbs. Those are still weird-looking to many people. Why not also show the frosted encased versions that look like a regular bulb. My point is that we're still a bit behind on how we portray the shift (except for the clear preference for "climate crisis" over "global warming" and the constant messages about saving money). So companies that can pitch environmental solutions with a combination of words and imagery that make the change seem like a life improvement, not just a way to assuage guilt over killing the planet, will also thrive.

Lots of other thoughts it was fascinating how little discussion there was on what exactly the climate crisis is -- maybe they figured people knew that already and were ready to hear what to do about it (probably a good call -- i love Al's PowerPoint presentation, but not everyone can stomach the science). Or, why did some artists need to politicize the event? I love Melissa Etheridge, but talking about criminal presidents and unjust wars was off-topic at best, and put off the 30% of the country that still support the President. Of course it would be within bounds to criticize leaders for doing nothing on this issue.

Obviously I could go on -- it was a long event. But clearly awareness is building in a profound way and consumers may just join this fight in earnest. Companies ignoring their new green demands better beware.

June 27, 2008

Conflicted Consumers

This post first appeared at Harvard Business Online.

How green are consumers in the U.S.? On one level, we haven't really changed all that much. Many pundits argue persuasively that without the rapid rise in energy prices, people wouldn't be buying smaller cars. And outside of some specific product markets, such as organic food, few are willing to regularly pay more for green. So it may be true that we're not that green yet, but there's something more important and subtle going on beneath the surface: the rise of the "conflicted consumer." This shift will drive tremendous change in products and draw customers away from some companies while they're not paying attention.

Last year, one item in Harvard Business Review's annual list of breakthrough ideas focused on research about these conflicted consumers, people who have social and ethical concerns about what they buy. Karen Fraser, whose consulting firm publishes the Ethical Reputation Index in the U.K., estimated that around 25% of consumers fit this description. The conflicted are distinct from the small group of diehards who will buy green or not at all. I believe that the true believers who will pay more for green are a small group that may not grow much. But the conflicted group, those looking for products that are environmentally or socially preferable at the same price and quality, is growing fast. And these people will jump ship as soon as there is a better option. Many companies will see their customers disappear and not know what happened.

More recently, some good data from the marketing agency BBMG gave us some more guidance on what this conflict is really about. In their survey of U.S. consumers, they discovered something really interesting about what attributes of products are "very important" to people when they shop. Ranking the attributes, quality and price were #1 and #2. No surprise there. But convenience and other sure-thing attributes had dropped from 3, 4, and 5, to be replaced by three aspects:

- Where was the product made?
- How energy efficient is it?
- What are the health benefits?

These three attributes explain a great deal about the rapid rise of some products, such as organic food. Keep in mind that these results were for all consumers, not the subset BBMG describe as "conscious consumers" (which is close enough to "conflicted" for me).

At the recent Sustainable Brands conference in California, the BBMG founders discussed their findings a bit more, and one thing caught my eye. Their survey showed that 35% of all Americans have avoided a product because of a company's practices. Again, people may not pay more for green products, but they may punish products and companies perceived as not socially or environmentally responsible.

This finding gibes very well with a study the Wall Street Journal reported on a few weeks ago on whether being ethical pays. The study asked people how much they would pay for a pound of coffee (or a T-shirt). Three groups were given very different descriptions, however, which painted a picture of either an ethically produced product (fair trade coffee, 100% organic T-shirt), a normal one, or an unethically produced product (industrial farm, low wages, and so on). The results were fascinating. As the Journal reported, "Consumers were willing to pay a slight premium for the ethically made goods. But they went much further in the other direction: They would buy unethically made products only at a steep discount.

I take this all to mean that conflicted, conscious consumers are a growing group. They still want price and quality — the BBMG study also showed that the most conscious segment wanted price and quality even more than the norm. But they want it all. If you can provide a green product at the same quality, you will win these customers. If you don't, they will pay a lot less for your product. The choice is clear.

August 11, 2008

Pitching Climate Change to Consumers

Recently I wrote about the rise of "conflicted consumers" who want greener options but don't want to go too far out of their way to get it. Is this fairly passive commitment to greener buying going to drive enough change to tackle problems as large as climate change? Some organizations seem to think not.

A few months ago Al Gore launched a $300 million ad campaign called "we can solve it." (Gore just proposed a goal for the country of moving to 100% non-fossil fuel energy in 10 years. Discussing that aggressive target is for another time.) The campaign features unexpected pairings of spokespeople - Al Sharpton and Pat Robertson, Newt Gingrich and Nancy Pelosi, and so on - who have apparently put their differences aside to push for more action on climate. The goal of the campaign is to "educate people that the climate crisis is both urgent and solvable." But the true aim is to get people moving - both politically and as consumers.

Gore's campaign is not alone. The "Together" initiative - with partners as diverse as TimeWarner, Dell, Target, and the city of Seattle - has similar goals but, more, it wants to provide consumers with actual products and services to reduce their climate footprint. Member companies can discuss their sustainability commitment in ads and on products as long as the NGO in charge (The Climate Group ) has vetted the claims. As the website explains, "we ensure that every product or service they offer through the campaign makes it easier or cheaper for you to do your bit and help tackle climate change." So the initiative is about purchasing your way to green. In that way, "Together" is very much like the Bono-led RED campaign for AIDS relief that Gap and others have pumped money into over the last year.

Why all this activity? Besides the obvious marketing benefit to companies, my guess is that many businesses have realized they need consumers to shift their thinking. The big trio of societal forces - government, business, and consumers - all need to change to tackle something as large and thorny as climate change. No segment can do it alone.

These campaigns, however, are fighting a historically tough battle. The environmental community has been waiting for 38 years (since the first Earth Day) to see a values shift in the U.S. They're still waiting. Sure, people buy more organic food, and they are flocking toward smaller cars to avoid energy costs, but the "conflicted consumer" is just that - conflicted. They aren't seeking out the green offering exclusively (which is why I advise companies to pitch their products on multiple attributes, not just green).

But all that said, all this marketing activity might work this time. The stars are aligned in a different way now than 38 years ago. Resource constraints are not theoretical anymore and market price signals couldn't be clearer. Greener offerings are also so much better than they used to be (yes, we can say it...many green products launched years ago, frankly, sucked).

So businesses should get ready to deal with more engaged, educated consumers who are tying their everyday decisions to global scale issues. Companies will need to change both products and marketing messages substantially.

Green marketing expert Jacquie Ottman recently gave an eye-opening talk about green marketing today (at Sustainable Brands '08). Of course she stressed the need tie green pitches to core product attributes, as I do. But she also went further and suggested that companies could start encouraging sustainable consumption. Perhaps, she said, companies could pitch buying less of something - imagine marketing execs bringing that campaign to their management! It only works of course, if companies make things that have lasting value or serve a need for longer than competitive products. Will Sarni, CEO of Domani Consulting (full disclosure: I have a business partnership with Domani), said this about Jacquie's talk: "She spoke the unspeakable." Yes, she did, and business should listen.

The big ad campaigns, combined with real world environmental pressures, will prompt many consumers to ask for something very different from the companies they buy from. Innovative companies will answer the call and happily and eat their competitors' lunch.

This post first appeared at Harvard Business Online.

February 9, 2010

Audi Green Police Ad: Funny or Not?

The Superbowl ads this year were fairly mediocre, on top of often being oddly dated and consistently anti-women. But one ad is getting a lot of discussion/attention in the green world: The Audi ad about the Green Police.

If you didn't see it, it depicts a new police force arresting people for choosing plastic bags at the supermarket or setting their jacuzzis at too high a temperature. Then a driver of an Audi "clean diesel" is waved right through an eco road block.

Was it funny? Yes (it's hard not to laugh when the eco-police, on their Segway's, ask a real policeman to "step out of the car" for drinking out of a styrofoam cup).

But was it also cringe-worthy? Yes. The ad really plays on all the worst stereotypes about how going green is hard and how you'll be judged. The redeeming quality is that the person doing the 'right' thing, the driver, gets a free pass.

But in terms of promoting green consumer choices, does Audi help the movement (and its own product) or hurt it?

What do you think?

July 8, 2010

Stop Confusing Your Customers with Cognitive Dissonance

Alternate title: Why are All the Lights in My Hotel Room On?

I recently spent two nights at the lovely, high-end Westin hotel in Ft. Lauderdale, FL. Around my room I found the now-standard signs that describe how the hotel will save water and energy by not changing sheets and towels. These green messages say to customers figuratively, and often literally, "we care about the environment." So far so good. But when I first entered my room, every lamp and light in the place was on...plus two radios.

The cognitive dissonance of arriving at a room with every light blazing, and then being asked to hang a towel up to save energy, can cause even the most mildly environmentally aware customers some heartburn. But worse, this weird in-room disconnect betrays a corporate, internal conflict as well.

I truly don't mean to pick on Westin; the entire hospitality industry is guilty of similar dissonance. For example, who decided that the now-common "turn down" service was a good thing? Even if everyone wants a nice chocolate on their pillow, does anybody really need to come back to a room with lights ablaze and flat screen TV running? Frankly, the first few times I encountered this bizarre hotel practice, it scared the heck out of me since I thought I was walking into the wrong room. Now I leave the "Do Not Disturb" sign up when I leave. But I digress.

My reaction at the Westin was not just me being an overly watchful green strategy guy. One of my clients at the regular (as in non-sustainability themed) event I was speaking at told me that having to turn off all the lights bothered her as well.

I'm not crying "greenwash" here -- this kind of disconnect is much more subtle. I believe that hotels are basically sincere about the "we care" sheet-and-towel cards around the room. The big hotel chains (Westin is owned by Starwood) have been making strides to reduce their footprints. They all have environmental advocates and executives now. But it seems likely that policies about how to greet customers (leave the lights on) come out of some other part of the company.

Because of that organizational disconnect, the hotel is forcing its customers to face two conflicting messages, one conservation-oriented and one theoretically welcoming, but blatantly wasteful. In the spirit of making my stay comfortable, they've chosen a path that forced me to do some work - going around to flip everything off - and annoyed me immediately. Compare this with hotel rooms all over Europe (and a growing number in the U.S., including the Encore/Wynn in Las Vegas of all places) that install master control switches near the door. These handy devices can turn everything in the room off at once or, in their best incarnations, require a hotel keycard to turn anything on.

My point is this: companies need to work these inconsistencies out internally and not make customers wade through them. The number of people who would find the dissonance disconcerting is certainly growing, so the risk of alienating customers is rising as well.

These kinds of inconsistencies are not exclusive to hotels; they crop up everywhere. Consider the rental car companies that automatically "upgrade" you to an SUV, when you've specifically asked for an economy or hybrid car.

But one example from the restaurant industry seems particularly egregious. This past Sunday, the New York Times Magazine ran a chilling article about bluefin tuna, a majestic species driven to near extinction by our ever-rising demand for sushi-grade meat. As part of its campaign to tackle the crisis, the author Paul Greenberg says, Greenpeace has pressured high-profile restauranteurs, particularly the owners and chef of the famous Nobu, to find substitutes. Nobu has continued serving the tuna and responded to the pressure by merely adding what Greenberg describes as a "haiku-esque warning on the menus of its London eateries" which reads:

"Bluefin tuna
Is an environmentally threatened species
Please ask your server for an alternative."

Nobu seems to be saying, "We sort of care about environmental issues and the death of a species our business depends on, but not really enough to do the work for you, our valued customer -- so please make the decision for yourself."

This attempt to "abdicate responsibility" to customers, as Greenpeace's Willie MacKenzie put it, is absurd. It will likely make those customers uncomfortable at best, and really tick them off at worst.

It's inevitable that as organizations navigate the complex world of sustainability, they will experience some internal cognitive dissonance about how they operate. Nobody said it was easy to balance the competing forces of (a) the inertia of how things have always been done, (b) the desire to meet the assumed needs of customers (for, say, welcoming, well-lit rooms), and (c) new pressures and questions about environmental and social performance.

But forcing your customers to confront these choices or, worse, making them do the work themselves, is not a good option.

(This post first appeared at Harvard Business Online.)

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November 10, 2010

Reality is Overrated as a Motivator

Right before the big election last week, I found myself thinking about beliefs and what people are absolutely sure they know, regardless of the facts. Two stories that appeared on the front page of the New York Times on the same day, demonstrated Americans' remarkable ability to kid ourselves.

- First, a story about how virtually everyone in America — and especially the anti-tax advocates — thinks their taxes have gone up or stayed flat under President Obama. They don't realize that taxes actually went down for, as the article says, "95% of working families." That cut to nearly everyone's withholding tax was a pivotal part of the stimulus bill.

- Second, a story titled, "In Kansas, Climate Skeptics Embrace Cleaner Energy," about a Midwestern non-profit, the Climate and Energy Project, that has gotten people to reduce energy use and emissions...by not mentioning climate at all.

The first story is a microcosm of every accomplishment the Democrats managed to keep hidden from the American public, but I'll leave real comment on that phenomenon to the politicians and economists.

But the second story is right up my alley — it's about how to motivate people to pursue the societal and economic benefits of going green. The Climate and Energy Project is cleverly avoiding the climate debate and thus any discussion at all that triggers arguments about the really bad misinformation out there (the article, for example, points out the shocking statistic that only 48% of people in the Midwest agree that there is actually warming going on — whether you think it's human-caused or not, temperature measurements are clear on this point).

Instead, Nancy Jackson, Chairman of the Climate and Energy Project, has hit on three alternative arguments to going green: personal thrift, the benefit to the community of promoting green jobs, and a religious appeal to "creation care." The program has targeted everything from home weatherization to getting the community to lobby Siemens to build a wind plant in the region. They've also gotten towns to compete with each other to save energy.

Their success has been remarkable; according to the Times, "energy use in the towns declined as much as 5 percent relative to other areas — a giant step in the world of energy conservation, where a program that yields a 1.5 percent decline is considered successful."

This group's work goes to the heart of a critical debate moving through the climate policy world. I recently took part in a meeting of green thought leaders to discuss why the climate bill in the U.S. failed this summer and what we can learn. We all asked ourselves, what's the right messaging to reach Americans? The only real divide in the room was over the question of whether to talk directly about climate change.

On the one hand were respected thinkers who said, "You can't solve climate without talking climate." On the other side came the argument that talking about saving money, jobs, the economy, and other drivers of action would do the job. Although I think that we probably have to talk climate change to policy makers, when it comes to reaching everyday Americans, I tend to fall into the latter group (see "8 Reasons You Should Cut Carbon (Aside from Climate Change)").

The lesson in Kansas is clear to me: it does not really matter if you believe in climate change. The logic of decoupling our country, our businesses, our communities, and even our homes from carbon, and from oil in particular, remains incredibly strong. At the macro level it's about national competitiveness, national security, and not relying on declining, ever-more-expensive resources.

But this applies on the personal level as well. Who doesn't want to save money and use less energy? Who wouldn't want their town to depend on locally-created, free energy?

For businesses wondering how to promote their green initiatives and products, I see lessons in how to talk to both consumers and employees. For employees, the best motivators are proven cost savings, good data, and competition. The Kansas program used all of these to great effect.

When talking to consumers, the lesson seems to be to use whatever combination of these works, plus throw in some values and religious mores, if that fits the audience. A call to save mother earth for purely environmental reasons might work well in Berkeley, but in Kansas make the subtle shift to talk about creation care, or don't go down that road at all.

So even though I titled this piece a bit sarcastically, the Kansas program works so well because it IS based in reality -- the savings you can yield, the jobs you can attract to your town, and the connection to religious values you can feel are all real. It's just not the reality of climate change.

The end result is the same — people are saving money and energy and starting to build a new economy. And if we move down the path to a cleaner world, who really cares how?

(This post first appeared at Harvard Business Online.)

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February 14, 2011

Ask Customers to Use Less of Your Product: The Big Heresy

I recently attended an Executive Sustainability Summit hosted by Xerox, Waste Management (WM), and Arizona State University. The short conference brought together public and private sector managers working on environmental and social issues. Xerox asked me to attend and give my thoughts on what I heard and saw*.

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What really struck me is that both Xerox and Waste Management are doing something mostly unheard of: they're working with customers to help them use less of their traditional product or service. The plenary panel during the Summit included execs from both companies proudly talking about these fast-growing, service-oriented parts of their businesses. And what's really important is that these are not just niche product lines, but fundamental shifts in what these companies do.

In some sense, this shift is not optional, as both companies are in the throes of fundamental transformations of their industries. Xerox has been navigating the shift to digital documents for years, and WM is facing an existential threat. As CEO Dave Steiner put it, "When your company is called Waste Management, and your customers all talk about 'zero waste,' you better change your business model."

So both corporate giants are handling the industry transitions by embracing sustainability to the core. Xerox's president, North America , Russell Peacock, speaking for the company at the event last week said, "Sustainability...is what is driving the transformation of Xerox to a services-led business."

Xerox advises companies on how to save money on document handling, and holds a sizable 48 percent market share in the broadly defined, and surprisingly large, $7.78 billion "managed print services" (MPS) industry (according to research firm IDC). Part of this new strategy is an outsourcing play — they'll take over all your print needs for you — to grab share. This is clearly not a niche business-this is a firm that existed on selling devices, paper, and machine servicing, so the more it's used the better.

But at the core, what Xerox is offering is less total printing. That's a big shift in business as usual.

Xerox has worked with multinationals such as Dow (case study here) to drastically reduce the number of printers sitting in individual offices by thousands, shifting instead to many fewer centrally-located multifunction devices. But at the Summit, Xerox execs gave an example from their corporate backyard. The company helped the city of Rochester, NY slash the number of printing devices from 459 to just 168, saving a very budget-constrained local government millions of dollars over the next five years.

These printing retrofits save clients up to 30 percent of their document-related costs. And the sustainability story is significant. In addition to using less energy to run machines, slashing paper use also saves large amounts of energy and water upstream in the paper production process.

For Waste Management's part, the story their execs told was similar but goes beyond cost savings and has a measurable financial upside. When WM helps customers reduce waste to landfills — which is how WM has made all its money until recently — it diverts those waste streams to recycling facilities which segregate materials to resell or to waste-to-energy (WTE) plants.

Recycling streams can generate income for customers. So instead of paying to dump garbage, customers may get paid for valuable material, which adds up (GM, for example, has made $2.5 billion on recycling over the last five years). Meanwhile, the other stream of waste will create a potentially significant source of clean energy (adding to the sustainability win). In its WTE plants, WM now produces enough energy to power 1 million homes, more than all the solar power in the United States. From waste hauler to energy company — that's a transition for sure.

These two companies are not the only ones out there going down the "use less" path. It's increasingly common in the B2B space. Another client of mine, Kimberly Clark Corporation, has similar conversations with its customers for its K-C Professional division, which supplies paper and cleaning products to public and private sector organizations. The customers appreciate supply partners that help them save money.

Let's be clear: Xerox, Waste Management, Kimberly Clark, and others are purposely cannibalizing their own businesses. The wisdom of such a strategy has been discussed in business circles for years, most notably in the work of Harvard's Clayton Christensen (The Innovator's Dilemma). My tweak to Christensen's famous term "disruptive innovation" is to describe sustainability-driven creativity as even more heretical; it's about questioning the entire consumption model — it's heretical innovation.

It can be painful for companies to threaten their own cash cows, but what's the other option? I interviewed Xerox's CEO Ursula Burns for my last book, Green Recovery, and asked her about this strategy. Talking about Xerox's service business strategy and its "solid ink" technology, both of which displace existing printers, she said, "Will these new products cannibalize our machines? Maybe, but someone else doing it is much worse."

So the choice is not between asking your customers to use less of your product and ignoring the trend...it's between you doing it or your competitor. That's the risk reduction logic. But a related logic relies on improved customer service and deeper customer relationships. As Waste Management's Steiner said last week, "We're cannibalizing our own business to give back more to our customers."

Xerox's VP of Environment Patty Calkins probably put it best during the Sustainability Summit: "Who would think that Xerox would help you reduce printing or that Waste Management would move toward zero waste?"

Who indeed.

(*Both Waste Management and Xerox have been clients of Winston Eco-Strategies, LLC. I attended this meeting at Xerox's request. This post first appeared at Harvard Business Online.)

May 1, 2011

Consumers Never Liked to Pay More for Green to Begin With

A week ago, the New York Times breathlessly declared in a cover story that during the recession, "As Consumers Cut Spending, 'Green' Products Lose Allure." It's a nice headline and makes it sound like the green product and business movement is in trouble. But the story, while interesting, doesn't really change the reality for business.

First, consumers never liked to pay more for green and, second, consumer pressure is not the biggest force driving the greening of business.

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Here's the story. The Times piece focuses on the rise and (sort of) fall of Clorox' Green Works cleaning products. Launched with much fanfare in 2008, Green Works quickly became the biggest player in the niche green cleaning space, hitting $100 million in sales before falling to $60 million in the recession (which is still a very respectable number in this market space). The Times crows that "As recession gripped the country, the consumer's love affair with green products, from recycled toilet paper to organic foods to hybrid cars, faded like a bad infatuation." So green products are on their way out, right?

Not quite.

First, as the next sentence points out, "sales at farmers' markets and Prius sales are humming along now" (fyi, Prius sales jumped 70% in February as oil prices rose). So two of the three categories the Times uses to make its point are actually growing, not fading.

Second, at the end of the article, a fascinating chart shows the "green share" of household products holding steady at about 2 percent over the last few years. The conventional brands like Clorox have flattened out — even as Clorox sales dipped, the total number of entrants has continued to grow. The niche brands, such as Method and Seventh Generation, have continued to nibble away at market share and actually grew during the recession.

To the extent that the premium-priced green products named by the Times have taken a hit, consumers' disdain isn't news: Recession or not, mass consumers never loved paying extra for green.

Asking people to pay more for green is usually doomed. Green has always been most effective as the "3rd button" (as my co-author and I called it in our book Green to Gold) to press in marketing pitches, after price and quality. The Prius is the premium-priced exception that does not disprove the rule. It's is a special case, since the purchase confers a range of emotional and value-laden benefits that household products just don't have (critics call the pride of ownership smugness — and, yes, I own one).

Therefore, in the trenches of consumer product development, the real story is the pursuit of more sustainable products that, as P&G execs say, create "no tradeoffs" for customers. Why ask people to pay more?

As more companies present green products at no additional cost, Wal-Mart and others will be happy to give them more shelf space, because what's really happening with consumers is subtler than a supposedly fading infatuation with green. As the Times story indicates, there is no rise in the percentage of "true green" consumers who will pay more for sustainable products. But there is a serious rise in the number of so-called "conflicted" or "conscious" consumers, which has been building for years. These buyers, which are quickly becoming the majority of consumers, not a niche segment, want it all. They demand more sustainable products at the same or lower price. The last sentence of the Times article actually captures this phenomenon:

"Sarah Pooler, 55, said she did not normally buy green products but would pick them up if they were on sale...'Bottom line, if it's green and it's a good deal, I'll buy it', said Ms. Pooler.

And so the race is still on to provide green products at the same price and quality.

But exactly because Ms. Pooler and millions of other buyers are still waiting for that price equality, I would argue that what is and has been driving the greening of business is not consumer pressure but a mix macro-level forces and operational sustainability success stories, the countless examples of reduced packaging, lowered toxicity, and condensed versions of products(in detergents for example) that save shelf space and tons of energy in shipping and storage.

At the macro level, the greening of products and companies is accelerating because the sustainability drivers are only getting stronger. Rising resource prices, ever-increasing transparency demands about what's in every product, and continuing pressure up the supply chain from business customers are just a few of the big forces.

Does anyone in the consumer product space seriously think Wal-Mart (and other retailers) will stop demanding sustainability-driven operational and product changes just because of the recession? On the contrary, the need to lower costs in the face of rising commodity prices is making eco-efficiency even more economic.

So even if consumers develop fickle infatuations with certain products, the business world is clearly developing a deep, abiding love of — or at least growing respect for — the power of sustainability.

(This post first appeared at Harvard Business Online.)

October 10, 2011

What Sustainability Should Learn from Steve Jobs

The passing of Steve Jobs was in no way surprising – we knew it had to be serious for him to leave the company he loved. But it’s still a shock that we’re robbed of his brain and all the amazing things that he would have invented.

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I had always hoped that this once-in-a-generation genius would turn his prodigious mental powers to solving the world’s largest challenges. Imagine a Jobs-designed, must-have iCar that people would want as badly as an iPad…Or an iHome that uses drastically less energy with its iFridge and iWasher…Or how about an iCity or iTrain to tackle urban design and transportation challenges?

We’ll never get those products from Jobs, so other innovators will have to fill the void. But there is one incredibly important lesson that sustainability-minded leaders can learn from Jobs’ legacy: you should lead your customers and show them a better way.

Steve Jobs did not ask people if they could use a tablet computer. In fact, in a long list of amazing quotes from the man, one of the most powerful is this: "It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them."

Before the iPad came out, plenty of pundits asked why anyone would really need a tablet. After all, laptops were fairly small already and we had connectivity and games on our phones. Why add this midsize device to our lives? Steve Jobs made us want to.

In my experience, most large companies today are “fast followers” – a strategy that has seemingly lower risk for a public company. But just look at the playing field littered with tablet computer also-rans to see how expensive second-place can be. And yet it still seems like the preferred (or default) approach for most companies.

This fiscal and strategic conservatism breeds a culture where execs prefer to wait and talk to customers before doing anything drastic. Of course customer (and other stakeholder) perspectives are critical. But as with tablet computers, when it comes to sustainability, often the customers don’t really know what they need.

Companies often gather data on what their business customers think a sustainable product should be, and the survey might show that including recycled material is important, even if that’s a tiny part of the real footprint story. Nobody knows the value chain of your product and service as well as you do (or if someone else does, get them in the room pronto). So figure out where the impacts really lie and what you can do to reduce your customer’s footprint in ways they hadn’t considered. This might require asking heretical questions about whether the product should even exist in its current form or should be converted into more of a service.

Do most people think they need a hybrid car, or would they even imagine that they’d share a car using a service like ZipCar? Probably not, but if the experience can be made fun and profitable enough, perhaps they will. The Toyota Prius has sold well, in part, because it did some exciting new things (ran quiet on no gas at times) in a familiar midsize car framework, much like the iPad looked like a big iPhone but could do so much more.

I wish I could come up with more examples of companies truly leading with sustainable products. It’s a sparse field for now, but that will change. The next generation’s Steve Jobs will most likely focus on sustainability since that’s where the largest challenges and business opportunities lie. Consider the case of William Kamkwamba, a boy from rural Malawi, one of the poorest countries in the world. At 14, this self-taught “Boy Who Harnessed the Wind” built a working wind turbine from scraps. He’s now at Dartmouth College.

The world contains some true innovators. Will our big companies find these leaders and harness them…or be brought down by them? I know which one I’d pick if I were normally a “fast follower.”

Here’s hoping we find the next Steve Jobs quickly, someone who can bring us green things we never knew we wanted so badly. Rest in peace, Steve.

February 27, 2012

Eco-Labeling: The Critical Questions to Ask

Will we see the day when all products carry environmental labels with data on carbon emissions and other impacts? Recent news tells us a definitive...maybe. Within a couple days of each other, GM announced new eco-labels for some Chevy models, while UK mega-retailer Tesco pulled back from an important 4-year experiment in carbon labeling.

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The attempt to give corporate buyers and end consumers more sustainability data about the products they are purchasing has had a somewhat tortured history. The Tesco experience in particular highlights a few big questions about green data labeling.

Tesco has been a leader in sharing carbon footprint information with consumers, having reviewed and labeled over 500 products. The company's efforts came on the heels of Pepsi's first foray into labeling with its Walkers potato chips brand, also in the UK. Since then, however, it has been running up against the most important questions about how to make data labeling work:

Which products "need" it? It makes a lot more sense to put information on a car, which is a purchase people research heavily and one that has a significant impact on a household's carbon emissions. Your potato chips, not so much.

What type of information should be provided (if any)? Is the carbon footprint the most useful data for customers to have? Or total energy use during the product's lifetime? The best thing to share will depend heavily on the product - the labels on energy hogs like light bulbs, air conditioners, and cars should tell us the total energy use and cost to operate over a year or the product's lifetime. For milk or snacks, the energy used to get it to shelves makes sense, but again, may not be helpful for consumers. So even without the specific grams of carbon, a combination of qualitative and quantitative info, like on Chevy's new labels, could still make sense in many cases.

Can you even summarize the sustainability of a product in a label? This is perhaps the toughest question and the literally hundreds of highly varying eco-labels out there attest to the challenges of trying. In some cases, like a car, maybe the concept of "sustainability" is fairly straightforward given how much of the impact comes in the "use phase" of the product — if you're getting 50% better fuel efficiency, you know you're reducing the impact a great deal. But how sustainable is 80 grams of carbon for a bag of chips? Heck if I know.

How much work/cost does it take to research and produce the label? Tesco made it clear that a core reason it's stopping this process is that each product takes "a minimum of several months' work." It's an interesting time to reach that conclusion because the tools for calculating footprint are evolving fast. But, and this is a big caveat, we're a lot closer to knowing the "hot spots" in most product lifecycles (e.g., for detergent, the largest part of the footprint is the washing machine in the home), than we are to knowing the exact grams of carbon per product. That level of sophistication will come with better data and carbon allocation methods (mirroring, I suspect, the cost allocation tools accountants have developed for a century). But isn't directionally correct information good enough in most cases?

Do consumers even care? This is the critical question, but the answer for now may not matter. Did people "care" about nutrition labels when they first came out? Probably not much, and it's unclear if they do now, given how unhealthy Americans are in general. But then, maybe our obesity problems would be worse without the labels.

But what's really interesting about all of this is that the consumer side of the discussion, while getting more media attention, has been less important in actually forcing change. It's in the business-to-business world that the demands for more information on every product have really been rising. From the Sustainability Consortium for retail and consumer products — which saw its own shakeup recently with the exodus of its Executive Director after only 8 months on the job — to the Sustainable Apparel Coalition for outdoor gear and clothing, industry groups are coming together to gather data and set standards for measuring footprints.

I am confident that Tesco and other major retailers will continue to ask suppliers for carbon data and other sustainability data when picking products for their shelves and setting up special promotions. The greening of the supply chain is the most dependable of trends in the sustainability sphere because there is so much clear benefit to companies when they know their value-chain footprint, from cost savings to risk reduction to better brand storytelling.

So much of this data-gathering and ranking work will continue unbeknownst to consumers. Given how much power retailers and other B2B customers have to transform products and pre-select better options for consumers, maybe it's actually better this way.

(This post first appeared at Harvard Business Online.)

(Sign up for Andrew Winston's blog, via RSS feed, or by email. Follow Andrew on Twitter @GreenAdvantage)

March 7, 2014

CVS Gave Up Tobacco -- Could Fossil Fuels Be the Next to Go?

The recent decision by drugstore giant CVS to stop selling tobaccoreceived a great deal of attention, as it should. It's a big deal when a US-based, public company chooses to stop selling something.

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Some have downplayed the move, calling the $2bn in lost sales "a mere dent" in the company's $123bn in revenues. But I challenge anyone to walk into their bosses' office at a big, publicly held company and say, "Hey, let's cut a couple billion from our revenue on purpose." The choice that CVS made, in a culture of relentless pressure on short-term earnings, was brave – full stop.

As others have pointed out, it was also a logical decision that was likely good for the business.

The free publicity alone was worth a great deal. And the goodwill from many customers should pay off. I realize my family makes an unscientific focus group, but when the decision was announced, my wife said: "We really should go to CVS more and give them some business." I went to a CVS that day.

More strategically, a couple of key questions come to mind. First, why did CVS do this? Perhaps they'll just save money. After all, Target stopped selling tobacco in 1996 to cut costs (from reduced shoplifting and anti-theft measures).

But I'm inclined to take CVS at face value. Here's what Larry Merlo, CVS' CEO, said about the company's core mission to provide health services: "Cigarettes and providing healthcare just don't go together."

That indicates this was a strategic decision about the future of the company. Still brave, but logical. It's a great example of what I call a big pivot – a fundamental shift in strategy and tactics to deal with some big shifts in how the world works. I usually focus more on climate changeand resource constraints as drivers of change, but health and wellness issues are extremely large forces to reorganize a company around as well.

The second big question is, what's next? What other items on CVS shelves don't fit the health care focus? Several columns in the Guardian – as well as The Boston Globe – call out the candy, soda and other fatty or sugary snacks still on offer.

It's worth considering, in a larger sense, the things many companies are doing today that don't fit with their missions. Does it make sense, for example, for companies that rely heavily on a robust middle class to fight a raise in minimum wages? A century ago, Henry Ford raised wages so more people could afford cars. And on Wednesday, apparel retailer Gap announced it would pay its employees more, raising its minimum hourly rate.

How about the use of fossil fuels in business? It may seem like a leap, but for many companies and organizations, using, supporting, and investing in climate-changing fuels goes against their missions. For CVS, we could ask, what's "healthy" about fuels that generate air pollution, which increases asthma and heart attacks, or that destabilize the climate and drive extreme weather that threatens public well being?

We can look at many stated visions for organizations and ask whether fossil fuels fit. Take Walmart's "Save money, live better" slogan. We're clearly not going to be living better with extreme weather, droughts and floods.

To Walmart's credit, the company is buying significant quantities of renewable energy (not as high a percentage of its energy use a few other retailers, such as Ikea, but still a quickly growing one). At the company's quarterly milestone meeting this week, it announced that 1,300 of its stores use renewables and Walmart de Mexico is now getting 60% of its energy from clean sources.

The company makes the case in mainly financial terms, saying it's paying less for energy, or by citing the resilience benefits. Those are great reasons, but a mission check might drive even faster adoption of new technologies.

Or consider the universities under pressure to divest from fossil fuels. Most recently, Harvard and Brown resisted calls to divest. They made seemingly well reasoned arguments: they have other means to effect change, their investment portfolios aren't so large as to influence the markets, and there may be hypocrisy in relying on fossil fuels to operate while de-investing.

A recent piece in The Nation makes a number of strong counter arguments, including the basic fact that climate change already disrupts university operations. For example, Tulane in New Orleans had to shut down for months after Hurricane Katrina.

But perhaps the most powerful argument is that climate change threatens a core mission of a university, preparing students for the world, by changing the world irrevocably. This means the universities may be training a generation for the wrong reality.

I recently wrote about three possible paths to getting us off of fossil fuels– government regulation, economics (as renewables get cheaper) and moral pressure. But there may be an important additional pathway that we can see at play in the tobacco example: changing cultural norms. Perhaps CVS has decided, about 50 years after the Mad Men era when everyone smoked, that it's just not cool anymore.

So who's going to be brave enough to say no to fossil fuels, without couching it in economic or business-case terms? Who will state clearly that this kind of energy no longer fits with what we want to be?

(This post first appeared on the Guardian Sustainable Business hub.)

(Sign up for Andrew Winston's blog, via RSS feed, or by email. Follow Andrew on Twitter @AndrewWinston)