Gil Friend, president and CEO of the consulting firm Natural Logic, is a veteran of the green business scene, dating back nearly 40 years, to his involvement in Buckminster Fuller's "World Game." He recently spoke with GreenBiz.com executive editor Joel Makower on the occasion of the publication of Friend's new book, The Truth About Green Business.
Joel Makower: Gil, you've been writing about green business for a long time and have a great perspective on where we are and how far we've come. When you stop and look at where we are today and the current trajectory that companies are on, how do you feel about it?
Gil Friend: I feel both excited and deeply concerned. It's like that old Charles Dickens line, the best of times and the worst of times. There's been a substantial, I would say even profound, increase in both the awareness and the engagement of companies across industries, and the sophistication with these companies are addressing green or sustainable business. And just over the last couple of years there's been a big shift in the seriousness of the understanding and seriousness of the commitment and the scale of challenge that many companies are prepared to take on.
That's the good news. The bad news is that we're still in a world of hurt and looking at worse. I don't think there's a single company, and certainly not a single government in the world, that is taking these issues on at the scale and the depth that the challenges require. There's a lot of momentum in the right direction and there's a lot of resistance as well. And I think it's anybody's guess at this point on how it plays out.
JM: What do you think it will take to cross that threshold, where the preponderance of what large companies are doing goes from "greening up" and "doing less bad" to truly significant, if not transformational, changes?
GF: It takes leadership. it takes repeated, demonstrated examples of significant business benefits. Right now we see leadership from Wal-Mart, driving a supply chain of 66,000 companies or so to engage, if not embrace, the goals and opportunities that Wal-Mart has set forward. We have evidence from them and dozens of other companies of the financial benefits.
But it takes a kind of repetition threshold that we haven't breached yet. I find that most people in business, in government, and even in environmental organizations are so locked into the assumption that "green costs money" -- that improving environmental quality will sacrifice economic well-being -- that it's very hard for a lot of people to see the evidence. I've had cases with clients and others who look at potential 40 percent ROIs from sustainability initiatives and say, "Well we can't afford it because it's green." They actually can't see the data on the page because they're looking through lenses that are so clouded by assumptions and history.
In my experience, the only way that breaks is by encountering it enough times, hitting that wall enough times, that finally the eyes open and someone says, "Oh wait, maybe this can work." So the evidence is key and we see a growing body of that but it needs to get stacked up and encountered again and again.
JM: Listening to you talk about the barriers, I'm wondering how much the term "green" itself is sort of a barrier. In other words, that if we were to hide the environmental agenda and just look at these as efficiency measures, that the ROI might seem more attractive and some of the ill-informed assumptions about "green" might go away. Does that make sense?
GF: It makes sense, but I'm not sure it's the way to go. These things need to be more apparent and more vivid rather then less vivid and more stealth. If you're talking about energy efficiency or waste reduction, it's going to sound green to somebody whether you call it "green" or "sustainable" or "regenerative" or "restorative"; the bias will still be there. The best companies that I'm seeing on the landscape are embracing the green label; they're embracing the broad engagement up and down their supply chain and across their employee universe to get everybody to the table with the full measure of creativity that this challenge requires.
And the very best of them are really looking at their purpose as a company. They're asking questions like "What business are we really in?" and "What are we really here to do as a company?" And finding that there's a kind of innovation in business and a kind of cohesion and power in the stakeholder community that comes from embracing something deeper, more powerful than merely maximizing return to shareholders.
JM: What about small business? I mean so much of this conversation around Wal-Mart and its supply chain, which are primarily bigger businesses. I speak to a lot of smaller business -- food distributors or equipment repair folks or printers or other kinds of mid-sized companies. They're really grappling with this. How do we get them engaged?
GF: The challenge with small companies is this: all of the issues apply -- large or small you spend money on energy and water and materials and you produce product and non-product, and you sell the product and pay people to take away the non-product and put it in a landfill or treat it. So the basic formula for large and small business, and in the way business and environment connect, are the same: you want to reduce inputs, you want to improve yield, you want to eliminate non-product. The challenge for small business is they rarely have R&D departments. They rarely have somebody with the bandwidth and the responsibility to take on these issues. And so it's hard for them to see how they engage, where they grapple, where they get the help.
The only opportunity for them is to engage everybody, top to bottom, in the organization in understanding the issues, understanding how that can affect their company, and make everybody sustainability leaders and innovators. Small companies may have to do that by circumstance. Big companies who do that by choice find enormous payoff in that type of engagement.
JM: A lot of what you have done in your own business is help develop metrics for companies to look at their "business metabolism," as you've called it. Is that something smaller companies can do as well?
GF: It's hard to take on the challenge of measuring more stuff. I think that the test that needs to be applied is "Is it useful? Does it produce beneficial results? Is it easy to do?" And even: "Is it fun to do?" We focus on providing simple web-based tools that automate the collection of the data and present a simple, visual, interactive form that anybody from a CFO to a janitor can understand. Companies can do this as simply as on a sheet of paper or with an Excel spreadsheet, to start is simply tracking your energy use over time, month by month. It can start with something as simple as that or looking at energy or water or waste production, so it's not too complicated. That's an exercise that any small company can handle in 10 or 15 minutes a month.
For those who want to go a little further and make this an ongoing, trackable computer-based system, that's easy to do with the kind of tools that we and a number of other companies provide to make this accessible in any web browser. Once you give everybody in the organization a view of "How are we doing right now? How are we doing in relation to where we want to go?", we find that that's an enormous opener of creativity. And the suggestions, as I said before, don't just need to come from a sustainability leader but from everybody -- shop floor, buyer, procurement agent, product designer, secretary, accounting clerk. They will start to see opportunities that nobody had seen before.
JM: I've heard a lot of companies complain that the biggest barriers to change are not at the top or the bottom. It's that big swath called middle management that often is the biggest barrier towards any kind of change, including environmental change.
GF: It's not that people in the middle necessarily don't want to do this, but they are typically beleaguered and overworked and tasked to accomplish and are compensated for certain things. So, yes, engaging the middle is absolutely fundamental. But it's like that old joke, "How many psychiatrists does it take to change a light bulb?"
JM: I give up.
GF: It only takes one, but the light bulb's really got to want to change.
So this is true with middle, top and bottom: The desire for change has to be there but you also have to create the conditions that enable that to happen. If you're incentivizing people to go in one direction and encouraging them to go in another direction it doesn't matter how many great speeches you give, it's not going to happen. Incentives need to be aligned. If people are tasked at 150 percent capacity and they're being asked to take on more jobs that are distinct, separate and additional to what they're already responsible for, it's not going to happen. No matter how many speeches you give them and how much they care about it.
So there's a process of organizational engagement and organizational design that really has to be part of the mix here. At the end of the day, if the inspired CEO retires and moves on and the next CEO doesn't have the same vision, the program dies unless it's embedded in the organization to the level that it's unavoidable for the new leadership to carry the program forward. And that comes back again to making the business benefits inescapably clear.
JM: The title of your book, The Truth about Green Business, implies that truth has been a commodity in short supply in this arena. Have you seen a lot of misinformation that's kept this from going forward and is that part of what you're aiming to do here?
GF: Well, the biggest piece of misinformation is this assumption that you have to choose between making money and making sense. That you go to work and it's just your job and it's just business, that you're going to maximize return to shareholders and you're going to go home and do the things that you really care about. And I think that dichotomy is a false one and I think the evidence demonstrates it's false one. We don't have to look just at the recent examples like Wal-Mart and GE and Nike and Equal Exchange and Stonyfield -- we can go all the way back to the Bank of America. When A. P. Giannini founded the bank in the late 19th century, he said, the purpose of this bank is not to maximize profit, it's to provide capital to immigrant communities in San Francisco who can't get it. And he said, if we do that well, we'll make plenty of money. I think the history on that has proved him out.
JM: And you think that that's part of what companies have to do to optimize in this new era of green consciousness?
GF: I think they have to drop the assumptions that they can't. They have to tell the truth about what their purpose really is. This doesn't have to be a philosophical question of "What am I really here to do?" It's also a very fundamental business question of "What's my real value proposition in the world? What is it that my customers want from me? Is it the stuff that I manufacture or is it the benefits they get from the stuff?" Engaging that question, as Interface and a number of others have begun to do, opens up whole new vistas.
You know, the "Truth" title may sound a bit arrogant to some -- I mean what is truth? -- it happens to be the title of the series from Financial Times Press that this book's a part of. But we're also challenging people to recognize that there are some fundamentals that are inescapable. We live most of our business lives in the world of economics. But "The economy is a wholly owned subsidiary of the environment," as Herman Daly said decades ago. And the environment depends on fundamental principles of biology and even more fundamental principles of chemistry and physics that you just can't escape no matter what your role in the company or your political inclinations. The laws of thermodynamics apply everywhere in the universe. You can't break those laws; as [Natural Logic director] Jane Byrd reminds me, you can only break yourself against them.
Photo CC-licensed by Flickr user jmenard48.