Will Sustainability Outgrow its Binky?
As readers of this blog already know, I had the opportunity to speak at the Sustainable Brands conference this past week. We shared our latest research in this space – which was well received by the way. We also had the opportunity to hear from other research firms about their findings. Of further interest, we heard what companies are learning from their own internal research endeavors.
Personally, I found the entire experience absolutely fascinating! As someone who lived and worked through the environmental movement of the early ‘90’s I was very interested to see how this latest resurrection of the green theme was actually being implemented within companies. The environmental movement of the early ‘90’s was predominantly regulatory driven with environmental science companies springing up practically overnight to handle the testing requirements of new regulation applied to the construction industry. Given this focus, there was not a lot of reason for anyone outside of the development community to attempt to understand the movement, let alone change their own business practices.
It looks like this time around, the environmental movement part two (sustainability) might actually stick!
In a way, it is another story of the chicken or the egg – which comes first? There are three primary areas of convergence that have to work in tandem in order for a “trend” to actually reach the momentum necessary to be viable for business. I believe I witnessed factors that showed this convergence is happening in the area of sustainability and creating real dynanicism and momentum.
Technology Provides Options
Throughout the conference, every so often you heard the cry – especially from international attendees – that doing sustainability or going green has to cost more money and therefore must be more expensive to the end consumer. The wringing of hands occurred as to “how do we get the consumer to buy off on this and understand they need to pay more for a ‘better-for-the-environment’ product.” This message has not been lost on consumers in the U.S. From a number of studies, including our own, the percentage of U.S. consumers who think green costs extra ranges from 67 percent to 74 percent. This is one of the major barriers to broad market acceptance of most green initiatives in the U.S.
I am happy to report that technology is once again changing the economic realities of the monetary equation in going green and establishing a strong sustainability presence. In fact, technological advancements in many areas are allowing companies to produce and introduce innovative, sustainable products to their end-markets – without charging extra! This is breaching a major barrier from the past and was very encouraging to see.
Business is Experiencing Real Benefits
Some say business has been reticent to move on sustainability initiatives because the consumer has not been ready. Well, our own research, which we unveiled at the conference, proves this is not the case and has not been the case for quite some time.
Let’s be honest, much like the commitment to customer experience which I have been preaching from the advocacy pulpit for over two decades, there are times when businesses just do not want to take action that can be seen as taking a risk. “We’re doing just fine and have been for years,” “I’ve never talked to them before.” These are just a few of the excuses we have heard about not committing to a long-term focus on customer experience.
While the excuses are different for sustainability, they flow freely from the tips of executives’ tongues. However, given time, enough of the case studies we were privy to this past week will start filtering through the business community. Once that happens in enough quantity, I believe we will pass a threshold where the discussion can mirror that of the adoption of online.
The questions will be: how did your company make that move? What was the trigger point for acceptance throughout the company? What are the communication mechanisms and messages that worked best for you? These will be only some of the questions the majority of businesses will start asking in the very near future.
What are some of the benefits to business?
It starts with the fact that business as usual is more costly than changing to today’s sustainable alternatives. The poster child for this fact is Wal Mart. They saved $10 billion dollars (that’s straight to the bottom line dollars) through changing their packaging requirements throughout the company.
It moves through to the consumer as companies start to realize sustainability must be one of the lenses through which they view their business – from their consumer’s eyes. The impact of this results in a ratio of more impact in a negative direction than positive but the point is, if you don’t know where your brand is positioned on the elements of sustainability you lose by default. It was demonstrated that a one percent increase in brand for sustainability (presented well) resulted in an increase of $8.7 million in revenue. Inversely, a decrease in brand for sustainability (poorly applied and messaged = green washing) cost the company $24.4 million in revenues.
This is very similar to what we discovered in consumers’ response to a company’s online efforts. The negative backlash against online efforts done poorly was three to four times as severe as the positive response to online efforts done well. The primary point in all this is we have reached a tipping point where the consumer will reward companies for doing sustainability very well and inversely, they will punish companies severely for doing it poorly. This is a critical juncture that has to take place before the lemming nature of business leadership kicks in and executives feel comfortable that the rules of the new paradigm fit that of a more traditional ROI model.
Finally, there is one often overlooked impact which all businesses will soon have to face. This is indeed a trend encompassed by a whole lot of other research data the likes of which most companies have a hard time digesting. This is the ability to woo top talent from the younger workforce to meet tomorrow’s demands.
There is no question the younger generation is seeking a new set of requirements from the companies they chose to work for. Green or sustainable initiatives are theoretically set in a new standard of transparency and authenticity. Two characteristics very appealing to the younger up and coming workforce. Two characteristics which traditional and established companies have not been very good at implementing.
Customer Experience Is Critically Important
I absolutely LOVED this part of the conference! No matter who was speaking, no matter the company they were representing or what process they were highlighting – the terms “market research” and “customer experience” were freely and unashamedly used as a central component to describe the what, why, and how’s of sustainability.
It was like watching an industry in its infant stage realizing a truth I have forced down the throats of industries for over two decades. The good news for me – all the leaders at this conference got it! Already!
They realize the required buy-in for future success of their initiatives rests solely on the consumer’s response to their initiatives.
If we look at it through the eyes of past “movements” it’s a strange combination of the Total Quality Management (TQM) movement and the online paradigm shift. TQM because companies realize a cost savings benefit. But, as I said during the heyday of TQM, no company ever paved their way to industry supremacy through cost savings alone. While providing a company much needed bottom line impact, there is a limit to the benefits of cost-savings. At some point, you have to make a statement and grow, something not accomplished through cost-savings.
It’s eerily similar in nature to the changes in consumer behavior brought on by the advent of the internet and online everything. However, this time, while technology is providing businesses the ability to conduct innovation, the real change is taking place in consumer’s attitudes first and then followed by actions, much the same manner which consumers took to the internet.
The challenge not adequately addressed by companies present at the conference – the what, why and how of holding marketing accountable for doing a good job of selling a company’s benefits to consumers of their green or sustainable endeavors. However, unlike in the past, this time, the convergence of focus on three key areas: technology, business benefits and customer experience – gives rise to optimism that sustainability in some form will impact and change business moving forward in lasting way. Only time will tell whether this wave can weather the impact of hostile economic conditions that helped derail the environmental movement of the early ‘90’s, but there is much that provides a strong indication that your company, if you work for one, will soon be wrestling with the issue of sustainability and it’s impact.
