WTFAQ is A “Green Giant”?

WTFAQ is A “Green Giant”?

 

As a quick disclaimer: if you haven’t already read our blog post earlier this year entitled “WTFAQ is Purpose-Driven-Profit?” You’re going to want to take the time to go through that one before diving into this one. Or if you’re feeling lazy and just want the “TL;DR” version, I’ll summarize it this way: in the past 2-3 decades, we have seen a progressively steep incline in the number of consumers who prefer to do business with companies that align themselves to a greater, over-arching cause. These causes can range from mitigating carbon emissions to recycling textiles to prevent waste generation and foster sustainability or even just sponsoring innovative initiatives to address present or future global pan-industry issues.

 

Take a look at Tesla Motors: while it may not be the most tantalizing company for traditional prospect investors, Tesla has generated a loyal customer base by manufacturing and selling products that are designed to help them live happier and healthier lives. All while remaining environmentally conscious.

 

Trader Joe’s is another example: twenty years ago, the supermarket chain began expansion from its native Pasadena, CA into other states and communities in the US, booming from 19 stores in 1988 to 150 locations by the turn of the new millennium. As of 2019, Trader Joe’s has nearly 500 stores across the nation. How were they able to achieve such expansive growth? By utilizing a few simple values that went against the grain of their established industry. Trader Joe’s buys directly from suppliers wherever possible, without charging suppliers shelving fees and keep their costs competitive.

 

Tesla, Trader Joe’s, and other companies like them have helped set a new standard for how businesses can operate profitability while remaining dedicated to higher social, economic, or environmental causes. And they are far from alone. Do a quick Google search for “sustainable companies” or “green businesses” and you’ll be hit with over one-billion relevant results to pick through (we both know you’ll limit your reading to a handful of articles on the first page of results, but I won’t tell if you don’t). But while there are thousands of case study examples for companies that operate sustainably, it’s the ones who have not only captured an opportunity in this industry space that will continue to grow in popularity and profitability but the ones who continue to create strategies for sustainable success who will grow from a fledgling cause into an eventual Green Giant.

 

To put it simply, a “Green Giant” is any company that is able to hit the $1 billion mark in revenue while implementing and maintaining sustainable and responsible practices through its operations.

 

(source: smallbusiness.co.uk)

 

If you helped operate a Fortune 1,000 business twenty or thirty years ago and went to your Board of Directors to say, “we need to put some kind of sustainable purpose over our bottom-line,” you would have been laughed out of the room, at best. At worst, you would have likely come in the next day to find your office cleared out and your new replacement behind the desk. Nowadays, this is practically expected of executive leaders to propose. Why? Simply: placing purpose over profit has shown to grow an organization’s customer base and its annual projected revenues year on top of the year. Between 2011-2014, US food chain Chipotle grew its revenues from $2.2 billion to just over $3 billion. For reference, Burger King closed out its 2014 revenues at $1.19 billion.

 

How was Chipotle able to pull this off? By responsibly sourcing their products from farmers committed to sustainable practices. This is a case study for companies to increase their stock value by focusing not on where and how a business spends its money to create value, but how it earns money to create value. Sustainability and profit are not in conflicting characters, but rather two sides of the same coin.

 

Hitting the $1 billion mark for any company is no easy feat, but it is overwhelmingly easier to accomplish today than at virtually any other point in corporate history. Technological advances (primarily, the introduction of the smartphone in the mid-2000s) have bridged the gap between brands and global consumers while increasing awareness of societal issues the world over. Consumers are more conscious than ever on the impact their spending behavior has on the industry, and industry has been catching up to increasing demands and desires of what their customers want. Companies like Airbnb, Credit Karma, Squarespace, DoorDash and hundreds of others have all passed the $1B in evaluations in the past decade.

 

But there is a stark difference between growing a company to $1 billion in its evaluation and growing a company focused on sustainability to over $1 billion in revenue.

 

So, “what’s the difference” you may ask? “How could I ever grow a sustainability-driven company to over $1 billion in revenue?”

 

Thankfully, there’s a rough blueprint for that as well. If you can fall into the following six characteristics, you and your company may be on its way to becoming the next Green Giant.

 

(source: sloanreview.mit.edu)

 

1. The Iconoclast Leader

 

While it’s true that every strong organization possesses strong leaders, those who lead Green Giants are slightly different. On top of possessing all of the “normal” characteristics of a business leader, those who lead a company on the path to becoming a Green Giant must possess the following traits:

 

  • Conviction: an inner sense of conviction is required to tackle the challenges that will inevitably be put in front of you. Will you be able to do right by yourself, your family, your team and your company while being able to do the right thing? This sense of conviction may be a lifelong belief you possess, or it may arise from a new experience. Regardless of the cause, you fight for, a lack of conviction will lead to inevitable failure.

 

  • Courage: in the process of building anything, you are going to face opposition. Whatever form it comes in, or whoever it comes from, it is your duty to stand steadfast in the face of this opposition and continue forward. Your actions will seem counterintuitive to others at various points throughout your journey, including colleagues, mentors, or even investors. You will need the courage to stand up for what you believe to be right and ultimately make a change for the better.
  • Commitment: similar to conviction and courage, if you are not committed to the cause for which you fight and the methods through which you fight it, your venture will not last. Likewise, you need to begin your venture with the passion to carry it towards its destination and not lose your tenacity to face objections and see your cause come to fruition.

 

  • Contrarian: building and growing companies is not a typical “9-5” job. You will need to possess traits and visions that may be classified as “abnormal” to others to accomplish the necessary tasks to become successful in your venture. Thrive on your contrary views, and don’t be contrary simply for the sake of being contrary.

 

 

For an example of these characteristics, think of Elon Musk. What could possibly cause the co-founder of PayPal to shift his focus towards sustainable electric vehicles, roof tiling to power homes, or autonomous rockets for space missions? He is a natural contrarian with the courage, conviction, and commitment to see his ventures through, regardless of what hardships or opposition he may face along the way. He doesn’t possess a background in sustainability, but he’s certainly helping to lead the charge on sustainable business practices because he knows that his actions can help accelerate greater economic growth and inspire new generations of responsible innovators to carry the torch in the future.

 

 

2.Disruptive Innovation

 

What is disruptive innovation? If you were born sometime before the late 1990s, you’ll likely remember a little company called Kodak, which focused on developing film prints of photographs. The company had a small department focused on digital photography production towards the end of its life-cycle, but then in 2004 Apple and its then-CEO Steve Jobs announced the iPhone.

 

This changed everything.

 

All of a sudden, people could take digital, studio-quality photographs with a portable device they could carry in their pocket without having to carry cumbersome equipment or wait days for their photo film to be developed at a storefront. In 2018, Apple breached $1 trillion in stock market valuations while Kodak filed for Chapter 11 bankruptcy in 2012.

 

Disruptive innovation is the ability to turn traditional business models on their heads, and Green Giants are able to showcase this ability within the realm of sustainability. While fast-food chains like McDonald’s and Burger King relied on the cheapest sourced ingredients for decades in order to provide customers with the cheapest possible products, Chipotle used responsibly-sourced ingredients and was able to reach over $3 billion in revenue by selling customers an ethical and environmentally-responsible $9 burrito.

 

Swedish company IKEA likewise disrupted the traditional furniture industry by offering customers access to stylish and affordable furniture which they can easily construct themselves at home.

 

Whole Foods supermarkets went against the grain by offering organic and ethically-sourced grocery items at a higher price than normal to consumers.

 

For Green Giants, disruptive innovation requires five principles for success:

  • Make it better, not just greener
  • Embrace the counterintuitive
  • Bet on yourself
  • Engage the problem solvers
  • Cultivate pervasive innovation

 

(source: kksadvisors.com)

3.A Higher Purpose

 

Every corporation exists to solve a problem for a target market segment of consumers while (hopefully) also generating a profit through selling its product or service. Likewise, every business that wants to sustain itself, in the long run, should have a well-defined mission and vision statement to abide by. If you want to turn your business into a Green Giant, you need to be able to not only ask yourself but answer the question of: “why does my business exist?”

 

If your mission and vision don’t at least help you answer this question, it’s time to rethink your business’s purpose. At the same time, ask yourself: “is our mission one that our team, our partners, and our customers one that they can believe in?” Again, if it’s difficult for you to answer that question, you will need to rethink your mission and come up with one that can answer it simply and concisely.

 

What is it about your company that makes you and your colleagues want to get out of bed and look forward to working day-in and day-out for years or decades? (hint: it’s probably not restructuring your third-quarter P&L sheets for the fourth time).

 

Does your business exist to create a better quality of life for your customers?

Do you want your business to inspire innovation in others?

Do you want to help make people shift into an affordable and more sustainable way of life?

 

At its core, your business needs to exist for a reason greater than making money to deliver to stakeholders. Define your company’s purpose and ingrain it as part of your company’s culture. Have it memorized by every team member of every department. Begin and open every meeting with a reading of your mission statement to reiterate and drive home the purpose of your organization.

 

Tesla Motors may be leading the charge (pun fully intended) for the American vehicle market to shift to electric cars as opposed to traditional carbon-burning automobiles, but do you think Elon Musk created Tesla simply for the purpose to build electric cars? He did so in order to accelerate (man, these puns just won’t stop today) the advent of electric cars into consumer markets by whatever means necessary.

 

Your business’s purpose, if well-defined, will eventually become its plan for success. It will motivate you and your team to outperform competitors, and it will motivate your customers to remain loyal to your brand.

 

(source: cersiusexecutives.com)

 

4.Built-In, Not Bolted On

 

True Green Giants possess the ability to intertwine social and environmental responsibility initiatives into their business agenda. They are not factors that are thrown into corporate literature or marketing campaigns ad hoc – they are philosophies ingrained within the DNA of the business structure itself. Remember that it’s not how or where a company spends its money, but how it earns this money. If these philosophies are not yet ingrained into your business but you still want to walk the path to becoming a Green Giant, you can still get there, but it will require you and your team to navigate through thorns, rivers, and rocks to do so.

 

How you ask? Begin by brainstorming strategies on how to incorporate sustainable practices into six core structures of your company:

 

  • Corporate Strategy: this is the backbone of your business – it’s operational core. Think about your business’s KPIs or Key Performance Indicators. These are the metrics by which you will measure and track the performance of everyone in your organization. Are there criteria in place by which you can measure corporate performance to ensure positive social and environmental outcomes related to your business? Is it even possible to do this for your business? You may need to spend the time to rework your entire business model into the seedling of your eventual Green Giant.

 

  • Organizational Structure: if you cannot intertwine sustainability and business practices into one item, you will innately delegate them to separate departments of your organization. Most large companies have some kind of Corporate Social Responsibility (CSR) document or page available on their website where they will mention their sustainable practices, but many also fail to mention these practices anywhere else in their organization. Ask yourself: what is your company doing to spark and foster long-term growth focused on innovation and sustainable growth? Once you have an answer, pose the same question to the leader of each department in your business and gauge their answers as well. If no one has any good answers, dwell on the possibility of employing a Chief Sustainability Officer. It’s not a solution in itself, but it’s a start.
  • Governance Structure: If your Board of Directors doesn’t possess someone on it dedicated to CSR, does it at least have an advisory committee or a group of experts it can consult on these matters? These people will be able to assist those who help govern your organization to ensure that sustainability is a core focus when it comes to corporate-level decision-making. They will act as your corporate guides through complex top-down decisions when it comes to setting and meeting your company’s goals. Their advice may seem counterintuitive at first, sure, but remember that their expertise on these matters and the traits they possess are what is needed of an eventual Green Giant.

 

  • Cost Structure: I briefly mentioned above how Chipotle was willing to take a hit on its up-front costs in order to supply customers with ethically-sourced ingredients for its menu. Sure, they have to charge $9 for a burrito, but it resulted in a long-term payoff. What costs does your business possess throughout its structure? While you may be able to take a hit on some aspects of cost, the big question is: “are you able to pass the additional cost of a responsibly-sourced product or service onto your consumer?” If not, you will need to grit your teeth and suffer the hit. Build the cost of sustainability into your business model rather than trying to bolt it on.
  • Incentive Structure: in Corporate Strategy, I talked about building sustainability into KPI metrics to measure and track your team’s performance, but what about the incentive? Say you have an employee whose KPI which focuses on sustainable practice is routinely met or exceeded. Should they not be rewarded for the extra value they have given your company and customers? Think about building your CSR key points into compensation measures – not just for certain team members or departments – for everyone in your company from the CEO on down.

 

  • Reporting Structure: of the 250 largest companies in the world, Japan and the US are the two countries that lead the charge in the transparency of nonfinancial reporting. For another 4,000 or so of the world’s largest companies, it’s much less so. In fact, only 3% of the world’s largest 4,000 companies offer to report on their sustainable practices. But we also know (if you read our post on purpose-driven-profit, that is) that companies that incorporate sustainable and responsible practices are growing faster than ones that don’t, and that investors are paying attention. Simply put – don’t simply talk about what your company will do to enact sustainability, do it and then be unafraid to show

 

(source: “Green Giants”, E. Freya Williams)

 

 

5.Mainstream Appeal

 

The word “activist” has a lot of negative stigmas attached to it. In my own opinion, this is because activists are unafraid to join and show support for a cause, but are widely skeptical to become the first to lead the charge themselves. There are plenty of counter-examples of this, however. One of them was even just named Time Magazine’s “Person of the Year” for 2019. What I’m getting at is, while an overwhelming majority of Americans claim to have good intentions to purchase green products and remain loyal customers to green companies, only a 16% follow-through while 66% generally don’t.

 

That 66% is the group you need to break through if you want your business to turn into a Green Giant. You can do this through a number of ways, but I recommend trying all of them. Just to be sure.

 

First off, make it personal. Yes, our planet needs help and is facing crisis after crisis, but Earth has been around for billions of years before humans came into existence. Should humanity cease to exist on Earth, our planet will still be here for billions of years longer without us on it. Make your organization an ethical company that sells a product or service, not a production or service company that has ethics.

 

Secondly, change your behavior first and your attitude second. Our beliefs and attitudes are shaped by our behavior, and the behavior we exhibit to others will help shape their beliefs and attitudes. Do you remember in the 1990s when companies and brands started weeding cigarette smoking out of the norm and force smokers to leave buildings – or even walk to designated outdoor areas – to smoke? Suddenly, smoking went from “normal” behavior to something widely perceived as unusual and dangerous, despite decades of factual messaging about the dangers of it. It wasn’t the belief that smoking was dangerous that changed peoples’ opinions, but the behavior they witnessed.

 

Third, guilt never sold anyone anything. I’m going to leave this with one example: PETA.

 

Lastly, you need to make whatever it is your business provides or sells easy, modern, and normal. As a child, you likely had parents like mine who reminded you with a heavy tone to, “never, ever, ever, under any circumstances, get into a stranger’s car.” Now, here I am twenty years later paying strangers to let me ride with them in their car to where I need to go through Uber. Twenty years ago, green products were also scoffed at and “for hippies,” but in 2019 you can’t walk through a shopping mall without passing at least two or three stores that sell organic, locally-sourced, or sustainable products. Humans are social creatures, and we rely on the behaviors of others to decide what is acceptable as a social norm or not. Whatever your business sells or provides, you need to market it in a way that makes it easily accessible, contemporarily desirable, and different enough to stand while remaining not so different that you land dead in the water.

 

(source: LIFE Magazine, 1996)

 

6.A New Behavioral Contract

 

In 1996, corporate giant Nike fell under heavy public fire after a picture of a 12-year-old Pakistani boy named Tariq was published in “Life” magazine, sewing a soccer ball among other soccer balls embroidered with Nike’s traditional “swoosh” logo. Tariq and others like him were found to be working 60 hours per week, for as little as 60 cents per day, in sweatshops. Soon, other manufacturers came under international scrutiny as similar conditions arose for other workers.

 

Rather than lashing out, Nike took responsibility. Less than a decade later in 2005, Nike made the information of all factories which produced their products – including the facility’s name, location, and the ratio of male and female works – all publicly available.

 

This kind of corporate responsibility and behavior is now not only what shareholders require of their companies, but an ever-increasing number of customers, too. We live in an era of conscious consumerism where people are growing more concerned about where their products are coming from and how they are made, rather than remain dazzled by the sheer quantity of availability that hit American consumers in the mid-late 20th-century. Social media is partially to blame for this. Companies that are unable to be transparent with customers or have questionable corporate behaviors upturned will be ripped apart at the seams on Facebook, Twitter, Instagram, YouTube, and TikTok (among other platforms). At the same time, companies that employ ethical practices and transparent behavior are often praised and see their brand’s sales relative boosted, simply because one person gave credit where it was due.

 

These practices are just the tip of the iceberg when it comes to building – or transforming your business into – a Green Giant. They are not easy, and they will not happen overnight, but they are absolutely worthwhile. And you don’t have to take my word for it, the data speaks for itself.

 

So, I want to pose a question for you, dear reader: what business do you have or want to build and turn into a Green Giant? Leave a comment below! We usually have a list of books for you to read at the end of each blog post to help answer any questions you may have, but we’re going to forego that section this one time. Why? Well, because we here at ecoSPEARS are going to perform a shameless self-plug and leave you with this…

 

 

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