CSR Wire just picked up our article!
CSR Wire just picked up our article!
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.
New Chapter natural supplements and vitamins started early in the 1982 with co-founders Paul and Barbi Schulick preparing herbal remedies in the back room of a redwood saltbox nestled high in the Black Mountains. They combined natural ingredients to create a pure product. When New Chapter became a brand known for organic vitamins and supplements, consumers assumed it was green throughout, the avant garde of green and sustainability. In truth, however, over the years of rapid growth, certain aspects of good stewardship were overlooked.
Enter Sara Newmark, daughter of Paul’s college buddy and then CEO Tom Newmark, who started her New Chapter career as an event planner. In 2006, just shy of a year with the company, she sunk her incredibly infectious energy into a new role as Sustainability Officer. “Developing the Sustainability Initiative should have been easy, given the nature of our products. However, with the day-to-day crazy busy growth we were experiencing, sustainability in terms of the entire company was never examined,” Sara remembered.
“We needed to catch up with our reputation in the marketplace. We didn’t use 100% recycled boxes as it was expensive and the people in charge of purchasing weren’t aware of how important it was to mission and brand. Now we’ve changed all the paper and boxes we use.”
Sustainability Initiative Slow Start With the CEO’s blessing, Barbi and Sara embarked on a Sustainability Initiative. Barbi had a unique position in being both a co-founder and the wife of the other co-founder. Sara had her own complicated relationship with the company. Very successful in her position, she was still the CEO’s daughter. Politically one would assume this to be a great asset, in fact it turned out to be a double edged sword.
“The combination of the CEO’s daughter and co-founder’s wife created some benefit and some liabilities. The CEO gave the directive to top leadership, but we weren’t taken seriously. We had to fight to have it ingrained throughout the company,” Sara noted.
The two solicited the counsel of Liz Bankowski, a member of the New Chapter board who had run social issues for Ben and Jerry’s 20 years ago. “She worked closely with us. It was Barbi, Liz, and me. No one took us seriously. It was not a company-wide decision to hire us as the sustainability team, which hurt us in the beginning.”
Sara, Barbi and Liz developed a sustainability matrix and presented it to the company at a staff meeting. The matrix included all aspects of sustainability such as sourcing green materials for packaging, energy usage, carbon footprint, volunteerism for employees, workplace issues, community involvement, et cetera. “We said: We are going to start by going for the low-hanging fruit, internal changes. We started with solid waste, purchasing and our employees behaviors.”
Low-hanging fruit – purchase of office supplies (pens, rulers, copy paper) The team started with something they thought would be easy: office supplies. “We decided to work inter-departmentally, and not house information within the sustainability office. I would be a resource, do the research, but the work would be housed within departments.”
“In other companies, you have to go through a VP for Purchasing. At New Chapter, we didn’t. All employees were allowed to order what they wanted though our Operations department. I completed an audit of all purchases, compared prices and sustainability (recycled products, local sourcing, etc) creating spreadsheets that could be helpful. Although some of the sustainable material prices were more expensive, taken as a whole, we could save money because we had never coordinated our purchasing of these items before. It appeared that everyone loved it.”
However, not everyone did. As there was no buy-in from Operations from the onset, the changes seemed imposed upon the department. “It took many months to get buy-in from everyone. In hindsight, it would have saved so much time to get leadership approval and work with Operations on the project rather than hand them an ‘easy to use’ spreadsheet.”
Challenges and the Slow Path to Sustainability “We then met with middle management. We asked all the department heads: ‘Where can you make green improvements?’ We followed up. They said they understood, but sustainability was always a separate item, pushed to the bottom of the pile of things to think about.
“Little by little, day by day, we started weaving sustainability into the fabric of everyday work, getting it into everyday conversation.” Sara noted how each new initiative that surfaced “We didn’t see changes right away nor get immediate satisfaction, but things started getting ingrained and started to change. Now sustainability is so part of who we are.
Sara’s Guide Points for Sustainable Sustainability:
• Leadership needs to be Engaged: Sustainability needs to be a leadership decision, something that leadership wants to see done.
• Be a Yellow Light: Relationships are the key business issue. Sara learned to not be a red light, a business stopper, but to be a yellow light, to get people to slow down and look at what we were doing. By working with people, adversaries can become allies.
• Embed Metrics into All Reporting: Each department needs one or two metrics to measure, it needs to be part of the reporting structure. Each department needs goals, and metrics to measure those goals. For example, New Chapter now has KPIs (Key Performance Indicators) that each department has to meet quarterly. We developed a matrix for goals that include Fair Trade, carbon footprint, solid waste, energy, opportunities, etc.
• Find a Cheerleader: Sustainability efforts need a cheerleader, someone to keep accomplishment lists and publicize individual efforts within the company. It can be a Sustainability Officer, but it does not need to be.
• We save some money, we spend some money.
Need for a Sustainability Officer? A CSO (Chief Sustainability Officer) is not necessary for every company, in Sara’s opinion, although a champion is. “Someone who knows how to ask the right questions and need to want to interact interdepartmentally.
Sara, herself, is a good project manager who can identify a project and know what needs to be done to complete it. And for a company New Chapter’s size, with its commitment to sustainability, it works to have a separate department dedicated to these issues. ”For years I was talking the talk, but not owning it, because I knew what was happening day-to-day at New Chapter, and we were not yet living up to where I thought we could be. Now we are.”
New Chapter’s current brochure has a detailed list of the sustainability practices they now have in place. http://www.newchapter.com/sustainability/organic “We’ve done the work, integrated this into our fabric, reached the tipping point, and are not doing business as usual. But,” Sara’s eyes twinkled. “we’ve just started!”