CSR Wire just picked up our article!
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Dear ReWiring Followers – This month’s post is a draft of an article we are shopping around. Any suggestions are most welcome! E & J
Fast Steps to Make the Ordinary Business Extraordinary: becoming a socially responsible business mid-stream
by Julie Lineberger and Ellen Meyer Shorb
Do you have a successful business, make good money, yet still unsatisfied? Perhaps there is a quiet fire in your belly gnawing at you, wondering: “Is this all there is?”
Cliff Cort of Triumph Modular decided to stoke those embers and rewired his business to create significant positive change not only in his own business, but in his industry as a whole. Cort wanted to build a legacy, he wanted to do something creative, and he wanted to make buildings he was proud of. While running a successful modular construction company, he latched onto the idea of offering Green Modulars (energy efficient and built with non-toxic, renewable materials). Fast forward ten years and now Cort is at the forefront of green modular buildings and making an impact around the world. In addition, he transformed the industry from formaldehyde boxes to non-toxic good design!
But what if you are hauling trash? Making cheese and milk products in Vermont or managing properties in Boston? Can you sell Apple products or vitamins or trucking services and make a difference in the world? Can an existing companies go SR/green?
What is a socially responsible business? SR businesses don’t evaluate or drive their business strictly on the financial bottom line, but rather a number of factors, including: environmental footprint, employee engagement, and connection to the community in which they do business. All SR strategies must be financially viable. In fact, our research shows that SR strategies add to the bottom line.
Ordinary businesses can go SR mid-stream We’ve spent the last three years interviewing companies with ordinary products and services about making the change to be driven by SR principles. These are not companies that were created to sell a green product, nor to serve their local community nor produce their product with minimal environmental impact. An increasing number of existing companies are changing how they do business and finding that doing so breathes new life, competitiveness, and efficiencies into production and market differentiation.
Strategies to re-orient an existing business How do you change an existing business to make it socially responsible? In talking to businesses across the country and across industries, we found 5 common and effective steps to “make an ordinary business extraordinary”:
• Stoke the Fire in Your Belly “Believe in what you’re doing, stick to it, hang in there.” This is not a simple group of aphorisms. The first step to rapidly make your ordinary business extraordinary is to WANT IT, to want to make a business that is much wiser and responsive and profitable. This means listening to yourself, tapping into your own hunger, fueling the fire in your belly.
Jan Blomstrann entered NRG Systems, a wind energy measurement device company, as a bookkeeper. Inspired by instituting SR human resources and supply chain policies that transformed her company, Jan transformed the company of which she is now CEO.
When Jan began, she was interested in creating a business organization and management systems to professionally run the company: accounting, hiring people, figuring out how to offer health insurance. The policies that made the most sense to her were socially responsible. “It was just the right thing to do, especially in terms of employee retention. In the late 1990s young people started sending in resumes. They said: ‘I don’t care what it is, is there a job for me?’” Jan was startled at the requests that were predicated not only on the wind industry, but by her socially responsible policies. “It was very infectious for the employees to see the success of the company. We were contributing to a new way of being and doing business.”
• Be a Champion or Hire One In an existing company, deep changes need a champion to educate and get buy-in from a variety of stakeholders.
When Ford Reiche owned Safe Handling in Lewiston, Maine, he spent two decades following the climate change debate, but made no changes in his trucking and transportation company until he met Andy Meyer. Andy was switching careers and wanted to make a difference in the environment; Ford saw his hunger and aptitude and hired him as his first “Chief Sustainability Officer.”
Meyer dug in, spent a lot of time on the floor, in the warehouses and docking garages and, with Ford’s support, initiated a sweep of initiatives that engaged the employees in thinking about how to save energy, thus saving the company money. Meyer started a program of noting good ideas and accomplishments on small steps with dollar bills at staff meetings. It was at once such meeting that an employee presented his research on a sign that requested people not to turn off a light switch. As it turns out, the light had been left on for three years and no one knew why!
• Build Unlikely Allies After 13 years with Cabot Creamery, Jed Davis was an assistant in the Marketing Department when he became filled with the idea of making the dairy cooperative more environmentally sustainable. It took him three years to convince Cabot management, but now the cooperative is being honored as a leader in the industry and individual farmers are greening their own businesses.
Currently Director of Sustainability, Davis worked across the Creamery to reduce solid waste. When Cabot controller Ed Townley first heard of Davis’ socially responsible goals, he rolled his eyes. Then Townley ran the numbers and realized the value of SR ideals both in terms of employee retention and reduced costs. He quickly joined forces with not only Davis, but Ed Pcolar who actually went with the trash hauler to the dump to count trash! After that experience, Pcolar had all departments weigh their solid waste and figuring out how to recycle just about everything. A few years into their initiative, the Cabot Creamery CEO was given an award for being an iconic leader!
• Implement Low Hanging Fruit First New Chapter Sustainability Manager Sara Newmark drew up a business plan to bring the Brattleboro, Vermont, company to its national leadership in sustainability. She initiated New Chapter’s sustainable policies with simple recycling, and in purchasing. Although she had created a business plan for the initiative, she saw a need to implement a few visible changes to start and then inspire others to follow.
She and company owner, Barbi Schulick, asked all the department heads where they could make green improvements, then followed up. An early and simple change was to check who was using recycled paper. As it turns out, different departments were sourcing their paper from different places. While recycled paper was more expensive than some were using, when all the departments switched to recycled paper, the bottom line expenditure for paper was less than had been previously spent.
Each department created goals and metrics to measure their results. An overall matrix for goals that included Fair Trade sourcing, carbon footprint, solid waste, and energy use was developed. The company then celebrated the department that recycled the most and who saved the most.
Little by little, day by day, they wove sustainability into the fabric of everyday work, getting it into everyday conversation. They didn’t see changes right away, nor get immediate satisfaction, but SR values started to become part of the way New Chapter does business. Now sustainability is who New Chapter is.
• Evaluate ROI from Multiple Angles and Share Casella Waste Systems Vice President Joe Fusco noted the coming changes demanded of his industry. Fusco says that they went from “hauling trash” to “managing resources.” Formerly any byproduct of a business was carted away to a landfill. Scraps of lumber, plastic, metal, packaging and food byproducts, all went to the equivalent of a cemetery to be buried.
Casella entered the recycling business and began to track repurposed resources. They celebrated with employees at each step by measuring and reporting out the difference they were making in environmental, community, employee satisfaction, and financial bottom line.
To assist in measuring what matters on a SR level, companies may use evaluation mechanisms such as the B Lab Impact Assessment (http://b-lab.force.com/bcorp/AssessmentReg) or Green America’s Certification Process, Green Gain, (http://www.greenbusinessnetwork.org/green-business-certification/how-can-your-business-get-certified.html). Such Corporate Social Responsibility Reporting, or Benefit Corporation Analysis, gives fodder to celebrate successes with the entire company.
Going SR mid-stream is harder and easier than simple change management In interviewing these companies, we asked ourselves, ‘Is this traditional change management? Are the strategies that we have outlined above the same that a company would have to use if switching a product line, expanding overseas, or consolidating three factories?’ In fact, the differences are important.
Going SR/green is a challenging transformation for a company to make because the field is still being created. In some cases, measurement tools have to be created industry by industry. Cabot Creamery joined with other dairy companies to design industry metrics and tracking, evaluation and reporting mechanisms.
Last, measuring financial success can be more difficult. The tie to employee retention and SR strategies is not always a clean nor direct causation. Payback terms may be longer than traditionally calculated. The metrics for success are not always an existing part of reporting systems to investors, shareholders, and owners.
On the other hand, markets and consumers are increasingly hungry for products and services that are made and distributed with a social conscience. We now have a language for SR, the “multiple bottom line” (planet, people, profits), “green”, “sustainable”, etc. The companies we talked to found that going SR engaged and retained employees. Resourceful ideas came from employees. Consumers were more attracted to companies with a social conscience. Energy savings and recycling saved the company money.
Perhaps most difficult to quantify, but most clear to those engaged in these transformations, is the fact that the employees and owners feel personally revitalized, engaged, and committed due to the conversion of companies to run in a socially responsible way. This intangible but powerful benefit can greatly propel a substantively significant change in business tactics.
This is an opportune time to go SR Ten years ago, making this kind of conversion would have been more difficult. An advisor on the board of an architectural firm recently admitted that 15 years ago she dismissed a strategic priority of the firm to be “sustainable.” Now the firm says, “We were green when it was just a color.”
There is momentum, a cultural change in the market, and a hunger among owners and employees to continue doing what they do so very well, but to positively influence the world, the environment, and their community, as they do so. While converting to be a socially responsible business can be logistically, culturally, and politically challenging, it is, hands-down, a smart business decision.
Our blog posts to date have covered individuals who own their own company or work at the highest levels. This interview is one of our favorite stories as it originates with someone who might best be described as “aspiring to the C-Suite.” Jed is a terrific example of what one orchestra conductor calls “leading from any chair.”
More broadly, this story illustrates the role middle management can play in successfully weaving sustainability into the fabric of modern businesses. While there are many excellent examples of charismatic, iconic leaders who bleed green and lead from the front, they remain a minority (albeit a growing minority) across the business landscape today.
So if sustainability is to become the norm, leaders must emerge from within, not just from above. These new, mid-tier leaders must have a deep seated vision, dogged patience, and an extraordinary ability to work through and with others. In the particular case of Cabot Creamery, this approach shows terrific promise for evolving the historic dairy farmer cooperative into a sustainability-driven enterprise poised for future success.
From Director of Marketing to Director of Sustainability
In 2007, Jed Davis was Director of Marketing for Cabot Creamery Cooperative, best known as makers of “The World’s Best Cheddar.” Cabot, which dates back to 1919, is owned cooperatively by 1,200 dairy farm families in New England and upstate New York.
That summer, David Hill, Cabot’s SVP Sales, had returned from a sales call where he was asked, “What is your Sustainability Program?” This sounded very different from the oft-asked, “Are you sustainable?” Cabot routinely interpreted the latter as an opportunity to discuss the many benefits of cooperatives, including working landscape, strong rural communities and providing award-winning dairy products.
Roberta MacDonald, Cabot’s SVP Marketing, tasked Jed with developing a Sustainability Program. Jed brought some perspective as Cabot’s longtime liaison to organizations such as Vermont Businesses for Social Responsibility, but this presented an exciting, new learning curve. Roberta and senior staff endorsed seeking outside counsel as well and Cabot turned to Mark McElroy from the Vermont-based Center for Sustainable Organizations for guidance.
Work on fully developing a Cabot Sustainability Program continued. By February of 2008, Jed went to Roberta to let her know he was spending 50-75% of his time on sustainability issues. By March, it was 100%. In early April, Roberta brought the situation to Rich Stammer, Cabot’s CEO. He approved of creating a new, full-time position called Director of Sustainability. Roberta supported Jed taking the role, but all agreed it meant Jed needed to leave Marketing, feeling that sustainability and “spin” needed to be comfortably separated.
Jed took a long view of his work. He had in mind a five-year plan to make Cabot a sustainability leader. Importantly, he knew he could not do it alone, nor could he become the “sustainability police.” So he began to make the case internally, listen to the naysayers, create quantitative and qualitative measures, and developing a support network for himself that both informed and inspired.
Make the case internally
It seemed to Jed that Cabot’s business approach, on a day-to-day basis, was quite consistent with the principles of sustainability, perhaps in large part due to its cooperative heritage. Still, the concept of Sustainability was not well-understood within the organization and was new to the radar screens of the CEO and the senior management team. As a result, what Jed had in a title, he lacked in specific direction and commitment. Jed needed to build support.
One of the key, original allies ended up being the farmers themselves, in the form of the cooperative’s Board of Directors. Each voting member of the cooperative’s board is a farmer himself or herself. Collectively they voted to support and fund a project with the Manomet Center for Conservation Sciences to create a sustainability scorecard for use on dairy farms.
What the board articulated very well was that they felt underserved to engage in conversation with their key stakeholders – from neighbors to local and regional officials and beyond. Intuitively they understood that in many ways, farmers are the original leaders in stewardship, but they lacked the vocabulary of Sustainability to have that conversation effectively.
They also recognized that to have a fruitful conversation about Sustainability, they needed to have measurements that spoke to their economic and social impacts, as well as their environmental impacts. Since farming is an occupation for less than 2% of the population, the farmers on the board were seeking a way to thoughtfully answer a question they were hearing more and more often: “Why is your dairy farm important to our community?”
Jed began working closely with Manomet in crafting a scorecard, based largely on prior work Manomet had done in the forestry industry. Very shortly it became obvious that this project had implications far beyond just Cabot and, in fact, on the scale of the entire dairy industry.
A year into the scorecard project – now called the Vital Capital Index for Dairy Agriculture – the leading, national dairy industry trade group, Dairy Management Inc., agreed to take on and fund the project while continuing to work closely with Cabot, especially on beta-testing the concept with farmers. Elevating the project to a national standard reflected positively on Cabot’s pioneering work, while also advancing national efforts towards a more sustainable dairy industry.
Listen to the naysayers
At the same time, Jed knew he had to engage the senior management team. Rich Stammer, Cabot’s CEO, was thoughtful about Sustainability but was looking for proof. Rich is an extremely intelligent leader, but hardly one who would be confused for one of the more iconic, green leaders. Cabot’s CFO, Ed Townley, admitted that at the time, he thought sustainability “was a crock.” Jim Pratt and Ed Pcolar, SVP and VP of Operations, respectively, were focused squarely on the financial bottom line; much less on the social, economic or environmental bottom lines. Jed began to work with each of these key allies.
At a pivotal meeting with senior staff, Jed and Mark McElroy were presenting the nuts and bolts of proposed Cabot sustainability metrics using context-based sustainability. CEO Rich Stammer, whose doctoral degree is in agricultural economics, challenged an assumption about using per capita as an allocation method. As the meeting broke, Jed’s heart sunk, only to rebound moments later as Rich came back into the room, clearly thinking deeply about the problem. He asked Mark and Jed to rework the calculations to provide allocation, instead, by some measure of added value. The resulting approach – a denominator that reflects contributions to economic value – was later dubbed The DeStamminator and has become a hallmark of Cabot’s efforts to advance context-based sustainability.
Create quantitative and qualitative measures
Jed also worked closely with Ed Townley, the CFO, to make sure that the sustainability metrics under development properly incorporated financial realities of the business. Ed himself proactively sought confirmation externally by asking key retail customers, “What are you doing with respect to sustainability? Do you have expectations of your suppliers?” Their answers led him to understand that sustainability was much more of a priority in our supply chain than he previously imagined.
In terms of organizational structure, Jed’s position was embedded in the Operations Team, reporting to Jim Pratt, SVP Operations. Here Jed’s focus turned to engaging key members of the Operations Team. Initially, Jed arranged meetings with key managers and supervisors and “interviewed” them as if for a story about Cabot and its sustainability practices for a fictitious magazine, Sustainable Dairy. The results were amazing. Stories emerged that revealed true pockets of innovation within the organization at one extreme, and at the other extreme, as Jed noted, “I felt like maybe I was speaking Italian” based on the glassed-over expressions that met him.
From this exercise, Jed had a better idea of who was ready to go, as well as who needed help starting the engine. For those in motion already, the focus turned to sharing best practices across the company. Amazingly, it proved over time that others, once their “engines” were fired up, have become among the most progressive managers in terms of piloting sustainability efforts.
With tremendous support from Ed Pcolar, VP Operations, a creamery Green Team was created. This inter-disciplinary, cross-functional team was set up to meet monthly and identify projects that fell within the realm of sustainability in Operations.
Environmental bottom line topics like solid waste and energy quickly emerged from within the group and soon projects in both areas were yielding bottom-line results to the tune of six-figures. Senior management took note, even highlighting some of the efforts at that year’s annual meeting of the cooperative, so that the farmers could hear the progress. The Green Team became emboldened by its own success. Importantly, Jed doesn’t lead the Green Team but serves only as an advisor/cheerleader. The team is led by one of its members.
Jed used these allies to build the case within Cabot that there was an extraordinary opportunity to adapt the way Cabot does business – to use Sustainability as a lens through which any and every employee can review their work and impacts and from that observation, choose a path of continuous improvement. Properly executed, this approach yields something for everyone, from employee satisfaction, to bottom line gains, to environmental impact reductions.
Create a support network
At the same time as Jed built unlikely allies, listened to the naysayers, and used independent quantitative and qualitative measurements to make his case, he developed a support network that sustained him and leveraged the work of Cabot.
Two key groups emerged
The first was a yearlong fellowship through the Sustainability Institute called the Donella Meadows Leadership Fellowship Program. Jed was chosen as one of 20 fellows from across the globe who met in person four times over the year for one week apiece. The program, based on the work of former Dartmouth professor Dana Meadows, co-author of the seminal Limits to Growth in 1972, focused on visioning, reflective conversation, and thinking in systems. Cabot supported Jed in this fellowship, an experience that had a monumental impact on his development as a sustainability change agent.
Jed also sought to network with other sustainability officers. A casual network, nominally called the Northeast Dairy Sustainability Collaborative, was created with Cabot and Jed’s counterparts from Ben & Jerry’s and Stonyfield. It was a unique opportunity to have three dairy brands with different product categories (cheese, ice cream, and yogurt) but similar sustainability aspirations and social intentions work together. The Sustainable Food Lab, an organization to which all three belong, facilitates two to three meetings a year for the group.
Leadership without authority
What I found powerful about Jed’s story is how he is exerting leadership without being in charge. Rather, he is imbuing in others a desire to change the way Cabot does business– by educating, showing competitive data, driving internal statistics, and holding up a mirror to the organization. Some individuals at Cabot are driven by the cost or competitive advantages. Many have also been influenced by the sense of doing the right thing. Jed would say the instinct to do the right thing has always been a deep-seated value of Cabot: a sort of Cabot karma.
Because of this, what Jed brings to Cabot is a natural fit. That being said, here is one guy with a lot of ideas, some eloquent language, and a healthy measure of elbow grease that has made a tremendous difference. One can truly lead from any chair.
 The Art of Possibility, Rosamund Stone Zander and Benjamin Zander, September, 2000.
9 October 2012 – Ellen Meyer Shorb