Co-Creating Planet-Friendly Profits

A few weeks back we talked about co-creation innovation. That's what we call the practice of finding a synergistic partner and creating something together. Our favorite example involves Procter & Gamble (PG) and Clorox (CLX), traditionally fierce competitors in the cleaning category, P&G was sitting on technology that could enhance the performance of trash bags, but didn't sell trash bags. Meanwhile, Clorox owned Glad, a leading bag brand. The two got together and the combination created a much better bag now sold under the Glad name—and hundreds of millions of dollars in new revenue.

As we said, we think of co-creation as a 1+1=4 equation: win-win. It often creates unexpected unions and it's going to change our world for the better.

That is our point here: Co-creation can not only succeed between profit-driven companies and nonprofits but also between profit-driven organizations and cause-driven ones.

We know, we know. There is a natural tension when the motives and missions that drive organizations differ vastly. Unfortunately this tension too often gets in the way of big ideas that would benefit the bottom line and the planet. Co-creation offers an opportunity to create a bridge between two unlikely partners. It alleviates misunderstanding, conquers fear, builds trust, and aligns each toward mutually beneficial goals.

There is already evidence that the idea works. Consider:

1. Act Now and Wal-Mart (WMT). Adam Werbach was the youngest-ever president of the Sierra Club. He also ran his own sustainability consultancy, Act Now. Wal-Mart approached his company for help to guide its process of greening (and attaining some public redemption). The partnership yielded co-creations like the PSPs (public sustainability pledges) that Wal-Mart employees make to each other. These lifestyle pledges have had a marked effect on employee morale and health; many pledged to commute by bike, stop smoking, and so on. As we wrote about in "Going Green's Unexpected Advantage," these initiatives complemented Wal-Mart's launch of efforts to reduce energy consumption by its stores and transport fleet.

2. Duke Energy (DUK) and the EDF. Duke has teamed with the Environmental Defense Fund to achieve its goal of "decarbonizing" its operations by 2050. Duke gains by leaning on the expertise and political integrity of the EDF, which leans on Duke's power as a leader in "dirty" energy to help push through legislation that would require additional energy producers to follow suit.

3. Hasbro (HAS) and Points of Light. The toy company and the nonprofit, which was designed to encourage service to others, have created "GenerationOn" to inspire young people (preschool through high school) to "make a difference through volunteering"—by tutoring those who need help or by working in shelters, for example.

At Maddock Douglas, we're not just talking about this opportunity. We're acting on it. Earlier this year we purchased Change, a Vancouver-based firm focused on building green, for-profit brands.Earlier this month we bought a second firm in Vancouver, BIRO Creative. BIRO, an online creative agency, helps cause-driven organizations create positive change for the planet.

Consumers Favor Green For-Profits

Why would a for-profit company focused on innovation (ours) acquire a green branding consultancy and an online movement firm? Because more and more people are supporting companies that want to create products, service, and business models that are both good for the bottom line and good for the planet. In turn these companies are seeing what happens when leaders identify and co-create with passionate advocates who are more connected, vocal, and aware than ever before.

Today, the best innovation practice looks like this. First, you find a significant need, or white space. Next, you invent a product, service, or business model that serves that need. Finally, you go to channel partners, customers, or consumers and encourage them to buy it. In the not-distant-future, we believe the most successful companies will intentionally enhance this model by including passionate advocates. These advocates will work with the partner, customer, or consumer to create the idea together. They won't have to sell it because their customer had a stake in creating it. Best of all, the co-creation process will include cause-driven and for-profit organizations.

If you think this sounds naïve, you've been missing a growing groundswell in "green white space."

Don't take our word for it. Listen to some of the findings from the fourth annual Global Consumer Study from the public relations firm Edelman:

86 percent of consumers worldwide believe that a business needs to place at least as much weight on society's interests as it does on its own.

71 percent believe that brands and consumers could do more to support good causes by working together.

62 percent of consumers said they would switch brands if a different brand of similar quality supported a good cause.

61 percent said: "I would help a brand to promote their products or services if there is a good cause behind them."

The biggest companies are listening—and doing well by doing good. We see progressive leaders forging unlikely partnerships for co-creation as just one more fascinating facet of this evolution.

Before it's here, it's on the Bloomberg Terminal.