Going Green's Unexpected AdvantageG. Michael Maddock and Raphael Louis Vitón
We think writing about our company is ridiculously narcissistic, but if you indulge us for a moment, we'll make a couple of points that can help you and your business. Here goes.
We recently acquired Change, a Vancouver-based consultancy focused on creating and branding green products and services.
"Why?" might seem like a no-brainer, but the environment isn't the only reason to turn eco-friendly. True, green is good for the consumer and our planet, but sustainability makes for a key driver of innovation and carries a huge competitive advantage.
Let us tick off three reasons, starting with the intangible and working our way to the extremely tangible—and potentially even more profitable.
Reason No. 1. It makes no sense to sail against the wind. You already know that all things being equal, consumers prefer green companies. And you probably understand that consumers are behind the governmental push toward mandating companies become more environmentally responsible. The upshot: You are going to have to go green. The only question is when. Our recommendation? It is always better to have the breeze at your back.
Reason No. 2. It can save you a lot of money. Although some companies still see an eco-friendly overhaul as an added cost of doing business without any substantial financial benefit, that thinking is, for the most part, passé. Adding a green tint to your business doesn't have to cost more. Simply using fewer materials to make your products constitutes "going green," and also cuts costs. Moving production closer to where the products are consumed counts as another example of going green—that's what the whole movement toward eating locally grown foods is all about—because it saves on transportation costs. Heck, even Wal-Mart's (WMT) vow to reduce energy in its stores qualifies as going green.
You probably know that former GE (GE) chief Jack Welch is often called the greatest CEO of the last century. But for all the accolades he received, those handing out plaudits missed a huge one: He was the King of Green. After all, Six Sigma, the management style he championed, is all about getting leaner: reducing steps, costs, and materials. Lean is green.
Reason No. 3. It's not that hard to apply a green lens. For us, this ranks as the most exciting reason to go green. It gives you a new way of looking at the innovation process.
Let's say you're in the flooring business. You think about competing on price, selection, kinds of materials, and all the other usual stuff. Now add a green lens. "Hmmm. What kinds of materials are easily renewable? Well, bamboo leaps to mind. I wonder if people would buy bamboo floors." The answer is "You bet." The material costs less than most kinds of wood and looks just as attractive. It's a win for you, because you have a profitable new product to sell. And it's a double win for consumers, who end up with a product they like and can feel good about because they made an environmentally smart decision (even if they didn't spend one single second thinking about the environment when they were considering bamboo).
Another example: outdoor "flooring" like decks made by such companies as Trex (TREX). As Trex points out, its products are "made from about 50% recycled and reclaimed plastic and 50% reclaimed wood. These materials would otherwise go unused in landfills."
That's good, of course. But what appeals to most consumers even more is that Trex's materials last far longer than wood—which tends to rot—and don't need constant maintenance. (If you have ever stained a deck on a hot summer day, you understand why that is important.)
We believe integrating sustainability into the everyday fabric of operation and embracing Conscious Capitalism—the idea that an organization has an obligation to act in not only its own best interests but also those of all its stakeholders—spur long-term growth. In 2010 and beyond, the creation of sustainable products, services, and business models that respond to consumers' unmet needs will drive profit. Companies that do good will, in turn, do well. And companies that refuse to comply with environmental standards and respond to consumer concerns will see punitive results.
So why wait? Looking at innovation through an additional lens—one that is green—can help you come up with a broader range of profitable products and services to make your customers happy.