ren-new.com » Smart

This company made their customers raving (green) fans

Caroline Rennie — Wed, 18 Nov 2009 13:07:17 +0000

When I was little my grandmother insisted on buying her groceries at a small shop. We had to stand in line and wait to be served. And when it was finally our turn the old man whose store it was, would shuffle around gathering my grandmother’s order. The process was slow, and felt silly to me – there was a convenient, large, modern self-service grocery just down the street. But my grandmother was clear that she shopped here because “you can trust the shopkeeper, so you can trust the products”.

Wouldn’t you love it if your customers were so smitten with your way of doing business that they were willing to put up with the downsides of doing business with you, just to have that confidence?

How about customers so happy they were willing to speak up for you in your advertising? It may seem incredible, but take a look at this ad (in the guise of a story) from Hitachi.

What makes this work so well?

The story makes heroes of Fed Ex’s customer facing people – their drivers. The trucks and the drivers help transform how regular people view Fed Ex – and invite conversation and a sense of connection. Good for employee morale, good for public image, good for marketing.
Making the film has made heroes of the behind-the-scenes designers and sustainability folk and procurement people. So the message to employees is “we think what you do really matters”. And its done in a way that employees can show to their families – and broadcast in advertisements and on the internet.
The film highlights that there was a coherent thought – from development of the right parts all the way to consumer. Because sustainability is linked to every firm’s self-interest, it feels credible. And, it feels clever – you think “what a smart set of companies”. They had the right product and the right vision and the right people to get something on the market that the world needs right now. And they did it in a way that makes money. How cool is that?!

Was Hitachi’s process really so enlightened and smooth? I can’t say for sure. But after spending some time on their site looking at their supporting actions, I felt that they have an approach that is forward looking, very human, enlightened and still self-interested. And that makes me want to trust them.

And that’s really the ultimate goal: have people want to trust you. Because they see you the corporation, as you – a person. A being that is reasonable, and well-intentioned, even if you’re fallible.

Lessons from . . . Pond Scum?!

Caroline Rennie — Mon, 01 Jun 2009 21:18:00 +0000

Pond Scum, scum, and other scum

Those of you passionate about pond scum – or addicted to interest rates, or afflicted with pernicious diseases – understand that progress is described in DTs or doubling times: the time it takes the scum/money/disease to double in population. When it comes to pond scum we are largely indifferent; when it comes to money we want DT to be as short as possible, and when it comes to disease we would like to delay the day of reckoning by extending the DT as much as possible. But very few of us associate climate change with pond scum.

That, dear reader, is a mistake.

The first global experiment
We are currently embarked on a huge experiment on earth – the experiment of “how to manage a super-successful species with an impossibly short doubling rate on a quite small planet”. By which I mean, that we have quite a short doubling rate historically speaking and earth has no doubling capacity at all. So we are filling up every aspect of our planet with our presence, our waste, our demands, and the like. And the rest of the planet (meaning other mammals and fish and mushrooms and insects not to mention the water and the air and … you see where I’m going…) has no say about this at all.

So at first gradually, and now pretty quickly, we are pushing other species out of our way, which means out of existence. You may be feeling triumphant about this: A sign of superior intelligence! A sign of greater strength! A demonstration of power! …and a sign that God is on our side!

Perhaps.

Or perhaps, this is a test we need to look straight in the face, and address.

Hardwired to behave like pond scum?
When I was born, the population of the earth was 3 billion people. You can thus assess to the year when I was born, or assume that I am wise beyond my years, or just an old crank. Each is, within measure, true. But it should be noted that fewer than 50 years later, the earth is ~6.8 billion people. That is to say that we are increasing at a very rapid rate. In fact, the rate of increase when I was born was roughly 2.2% year – a doubling rate of 31 years. We met that handily I’m afraid to say.

And when we double, we more than double our appetites. When I was born (let me come clean – we’re talking 1960 here, not the dark ages…) there were no mobile phones (replaced every 2-3 years); laptops (replaced every 3-4 years); fax machines (come and largely gone), or most of the other absolutely essentials most of us live with today with hardly a thought (though plenty of complaints… and even more waste).

Thus we have increased our per capita consumption of calories, meat, processed foods, packaging, fuel, electricity, batteries, furniture… pretty much everything. Which means that the rate at which we consume our planetary resources is even more rapid. So it is no wonder that WWF tells us that we have exceeded the earth’s capacity: that rather than live off the interest, we are living of earth’s capital.

We have now affected the global climate to a point that scientists consider detrimental to our prospects for survival as a species. And, like junkies hooked on drugs, we are so hooked on oil that even though we know that oil only makes things worse, we are exploring new sources that will take only slightly less energy extract than they will provide: oil sands.

Even though we are smart enough to see that we are heading in the wrong direction, we are hard-wired by millennia of evolution, to deal very well with immediate threats like a lion about to eat us, and very poorly with incremental threats – like climate change – even if they have equally detrimental consequences.

Pond scum, and . . . scum
Which brings us back to pond scum. If the doubling rate of pond scum is one day it can take weeks and months – even years – for the scum to cover half the pond. But the day the pond is utterly covered with pond scum – and undrinkable, unswimmable and ultimately unlivable, is just one day after that. Yet when the pond is half full, everybody thinks, “well, it’s not that full, we still have some time, it’s growing bit by bit…”.

And this is where scum come in. We are already hardwired not to really feel slow incremental change, even if our brains can see what is really happening. And some companies are playing on that: sowing doubt (where scientists have basically none). And others (who find it easier to do what they are doing today than change for the better) jump on the bandwagon, and suggest that any changes will bring down the system and create havoc… They are creating the urgent monster that inspire our brains to fight or flee: in this case, fighting people who attack the status quo in the name of climate change.

Here’s why that (scummy) strategy works:
Dan Gilbert, Harvard professor of behavioural biology has studied the human brain for decades, and determined that we are brilliantly designed to respond to evil predators who suddenly threaten our immediate well being. Long term climate change doesn’t meet our brain’s warning and fear needs. But the alarmists who threaten we’ll lose our way of life due to climate change – well they are the problem. Blame the messenger!

Beyond scumminess:
What you want to do is implement small changes, that can grow incrementally until, like pond scum, they are everywhere – without breeding resistance.

At Yahoo they ran a competition to cut CO2 for each employee by 20% for one month. They provided power-saving-tips, carpooling, meatless lunches, etc. The prize if the company made it: see the CEO & COO fight wearing sumo-suits. Not only did this work, it so invigorated that organisation, that many other changes came to the fore, and while not all the initiatives lasted continuously, many did, and new ones had a chance to be evaluated and adopted.

At IBM they said – “we want to make a business out of being green – so anything you think you can sell, we have to do internally. That will give us credibility in the market place.” Not only did that excite people who wanted to sell ideas; it excited people who were back-office and could invent a product that company could then sell.

At Wal-Mart they said to employees and suppliers: Here are our super-ambitious goals. We want to improve year-on-year – but we won’t micro-manage – you tell us what’s best. We’ll work with you to get there, and we need you to work with us to get there.” And while they had areas of focus (such as packaging) the benefits came from new products (such as concentrated detergents and compact fluorescents); and new processes (such as cooler lighting in freezers that reduced airconditioning).

We will survive…
With strong intentions we can rise above pond scum, use the brains we’ve built over millions of years of evolution, and grapple with the environmental problems we have actually created for ourselves.

Because the alternative is to grow like pond scum, choke our own home, and possibly choke our means for existence…

Image by Swampman on Flickr.

What McDonald’s did wrong, and Wal-Mart does better

Caroline Rennie — Thu, 26 Feb 2009 23:36:00 +0000

by Caroline Rennie

McDonald’s could be doing smart, community-building work that builds brand value. But they’re not. Here’s what they’re doing – and what Wal-Mart’s doing better.

The story:
Nigel Haskel, a minimum wage, 21 year old employee, sees a man start beating a woman in the McDonald’s he works in. He intercedes on the woman’s behalf, gets the attacker to leave, and then blocks him from re-entering the restaurant. For his pains, the attacker shoots him multiple times, and Nigel has to have several abdominal operations to repair the damage and extract the bullets. He still has a bullet inside.

Six months and $300’000 later he is denied workers compensation benefits: McDonald’s refuses his claim as they say he should just have called the police.

What’s wrong with this position?
From a business point of view it is wrong because it tells customers that they may not be safe in a McDonald’s because McDonald’s will not protect them. That seems wrong-headed at a time when trust in business is at a low.

Secondly, it ignores fundamental human notions of protection, ‘doing the right thing’, standing up for decency and justice. This threatens their community standing.

Compromising your welcome in the community
When corporations forget the spirit of laws, and live for short term benefits based on the rule of law, they compromise their welcome in communities. That compromised welcome is what has driven Wal-Mart to embrace the environment and sustainability so powerfully and visibly: they needed to re-establish credibility with communities so that they could continue to expand. And in doing so, they have expanded among consumer classes who did not readily or happily shop at Wal-Mart before.

Wal-Mart seems to be learning that doing the right thing by community can build business [see next week's column on transparency]. McDonald’s, who made themselves the butt of 15 years of jokes and bad press when they pursued two activists through the UK and European courts in a case dubbed McLibel, seems to be struggling with learning.

Better to Do the Right Thing
Two thirds of McDonald’s revenue growth comes from upscale, healthy food*. This is exactly the kind of market that is most likely to be put off by insensitive behaviour and everything it implies. The public in general hasn’t taken kindly to the arrogance of bankers and car companies. Perhaps this is a time for McDonald’s to cede their “right” to do the wrong thing, and instead do the right thing- so that they continue to build brand value and affection.

*Dean Ornish, TED conference 2006

Lobbying: a proven way to lose money?

Caroline Rennie — Mon, 29 Dec 2008 15:21:00 +0000

by Caroline Rennie

The International Energy Agency estimates that coal companies ought to be spending $2 billion a year for ten years on clean coal technologies, and Credit Suisse suggests they should be spending at least $1.5 billion. Actually, coal companies are spending a fraction of that on development, and half again as much in lobbying. To what end?

The Facts
The American Coalition for Clean Coal Electricity (48 coal and utility companies in the US) spends the equivalent of 350 million a year (for ten years) on clean coal technology development, and the US government adds 190 million more. At the same time, the Center for American Progress reports that coal companies are spending $125 million/year to lobby against carbon emission standards, and a further $45 million on advertising to consumers: $170 million a year total for communications and lobbying.

Assessing the value
How do we assess if that is a smart investment for the companies, or money that would be better spent working on technology development?

A smart investment is an investment that 1) minimizes a company’s costs both in the short term, and in the long term; 2) serves as a profit center; 3) builds relationships with key stakeholders.

Cost minimization It can be argued that the lobbying minimizes short term costs as it serves to keep investment costs at 1/4 those recomended by the IEA (1/3 if we include the amount spent on lobbying). Longer term it would be surprising if the costs of buying themselves out of the obligation didn’t rise substantially – after all, as an industry they are relatively easy to regulate: a narrow sector with few companies, responsible for 27% of the US greenhouse gas emissions. The Obama administration has already signalled that it supports cap-and-trade policies. Thus the ability to simultanously reduce their own emissions and sell the unneeded credits would be rewarding in the US as well as in Europe.

Profit Center European companies are working on developing carbon capture and storage capabilities – witness the Vattenfall plant in Schwarze Pumpe, in the former East Germany. While this is smaller than standard plants, it has been in operation since September, 2008, and the learnings will enable Vattenfall to sell carbon offsets for the recaptured carbon, as well as selling the technology, thus making their investment pay twice over. The carbon market today is over $64 billion according to the World Bank, and is predicted to grow to $100 billion by 2010. This will stimulate demand both for carbon reduction technologies, and for carbon credits. Given their current focus, US coal companies may deprive themselves of the opportunity to develop a profitable technology and to lower their emissions. Worse – they may end up buying both the technology and carbon credits from their European competitors. Were they to use their lobbying resources to grow public investment in clean-coal technologies instead, they might get the kind of returns Vatenfall is foreseeing (and quite possibly realising).

Building Relationships Short term, relationships are built at the political level – but lobbying relationships aren’t loyal relationships – they depend on a constant infusion of cash. Furthermore, the approach taken by the industry has raised such ire among environmentalists, that the latter are paying for ads to counter the coal industry “clean coal” advertisements. So the positive feelings that the clean coal campaign is seeking to engender in consumers, are being undermined publicly by sources fundamentally more credible – including Al Gore.

A Shining Example
Lest this be seen as too hypothetical, let us take the case of GE – which in 2004 developed its “Ecomagination” green initiative. At the time, their green products were worth $4-5 billion per year. Today, four years later, they are worth $18 billion. To take this to the next level, GE’s CEO Jeffrey Immelt is lobbying Washington to extend tax credits for Renewables, as well as to invest in Smart Grids. And he lobbies in conjunction with environmental partners as well as with unexpected business partners like Google. (Jeffrey Immelt discusses their business centered environmental approach – “not CSR” he emphasizes- at Google Zeitgeist. video below)

Has the industry done a cost-benefit analysis on its lobbying strategy? Undoubtedly specific companies are seeing benefits to their lobbying: several companies including Duke Energy, Consol, and Southern Co., have projects in which the government puts in twice as much money as the private companies do. But most do not see these benefits. Overall, the strategy the coal industry is taking seems liable to cost it considerably more than it saves: in terms of cost of doing business, in public good will, in future investments, and in relationships with the new administration and its allies. But perhaps most humiliatingly, the industry and its executives could be seen as backwards, much as the American car company executives are today.

In light of climate change and the mechanisms that are pricing carbon globally, the opportunities to make money from doing the right thing by the climate are huge. Why choose a rear-view mirror for steering?

Find your smart sustainable business strategy with ren-new today! contact us by clicking here.

Has e-bay done you a world of good?

Caroline Rennie — Wed, 10 Sep 2008 05:01:00 +0000

by Caroline Rennie

e-bay recently launched World of Good – a corner of their site dedicated to products that are certified as sustainable according to criteria available on their site.

So what? you might ask.

So they’ve saved you a mountain of work. In launching their “sustainable” stream, they have teamed up with non-profit organisations that deal with community and environmental issues, as well as certification bodies. Not only does their method ensure that they capture the relevant issues to their company – it ensures they capture the issues relevant to some of their key external stakeholders. And the fact that their method and criteria are transparent means that you can get a leg up for free – a good approach, a good model, carefully thought through, whose rationale is available for you to base your work on.

Furthermore, while they have taken no ownership of these methods – preferring to leave ownerhsip of standards to the non-profits, they have branded them: “Trustology” and “Goodprint”. So while they aren’t seen as being particularly dominant and perhaps domineering, they are getting full value for their good works. And thereby, they have turned their natural critics into ambassadors.

This parallels what we see with retailers such as Wal-Mart, and manufacturers such as Interface, who have teamed up with environmentalists and other sustainability advocates in developing their programmes. In this way they ensure that the work they do stands up to scrutiny from experts in the field. But by branding it themselves, they ensure that this is an e-bay product with explicit e-bay value.

So, they have non-profit organisations eager for greater credibility and visibility, helping them establish their own profile in the sustainability domain. And then get free marketing and credibility from their partners.

Smart partnership. Smart business.