Can You Make a Green Product in a Gray Company? Part 1
Can You Make a Green Product in a Gray Company? Part 1
Interface, the Georgia-based carpet manufacturer, is possibly the most-cited example of how to run a environmental business. Its CEO, Ray Anderson, has long been an advocate of teach-by-example sustainable practices, and his company has shown how to put cutting-edge ideas into practice and profit handsomely.
As part of her recent article on taking green business practices to the next level, Sarah Fister Gale spoke with Jim Hartzfeld, the managing director of the company's consulting group, InterfaceRAISE, in a wide-ranging interview about how Interface took their green goals to the next level, and help other companies make the most of their operations.
Part one of this two-part podcast looks at the history of Interface and Interface RAISE, and the ways in which the company put its ideas to work in-house before spreading the word far and wide.
Next week we'll dig into specific examples from InterfaceRAISE and get advice from Jim on shifting to a new mindset to take your company down a greener path.
Sarah Fister Gale: First tell me a little bit about InterfaceRAISE, and then I'd like to go over some of the achievements you've made at Interface.
Jim Hartzfeld: O.K. Well, quickly, InterfaceRAISE is a relatively new business unit of the Interface Inc. family of companies. Most of our companies obviously focus on the manufacturing of carpet around the world on four continents, mostly for the commercial space, but increasingly for the residential space.
Our chairman and founder, Ray Anderson, in '94, had a complete personal and, I guess, business epiphany on the subject of the environment and sustainable development and from the very beginning, saw it as a big, big strategic idea that if he could figure it out, could perhaps make his competitors obsolete.
Now we haven't done that yet, obviously, but the idea of it being a core strategy of the business that would drive business value and innovation, and from the beginning that was a key piece of that. Well, for several years as we worked to develop that, certainly in 1994, there were no recipes.
There were no textbooks that you could go to. But what happened is that became more and more obvious to companies around us, and even our analysts that cover our stock for Wall Street (saw) that this had become a core piece of the competitiveness of Interface. As that information and awareness began to spread, more and more companies kept coming to Interface to ask how did you do this? How can we do this? It came to the point where almost in response to that interest we created InterfaceRAISE as a separate group, as a consulting group to help other people.
Our model is a peer-to-peer business model of business people helping business people just based on the 14 years of experience that we've had in making this happen in a publicly-traded company. We see increasingly that people really value that kind of perspective separate from some of the other people that are working in the space.
SFG: Right. It's interesting you say throughout all of that example that this was a good business strategy, that it helped you be competitive, so this was never just about being an environmentally good citizen. It was in doing those things, you made your company better.
JH: Yes, well there are two pieces of that, and I'd talk about it and in some different parts of the world, different terms seem to have more weight or more prevalence when you talk about CSR, corporate social responsibility or sustainable development. The big idea I think is there are two pieces of that. Yes, given the scale, the scope, the influence that business has on the world stage, it does have a responsibility, but the key point is recognizing there's a huge business opportunity absolutely tied to that, and that was I think somewhat of what was unique about Ray Anderson's epiphany on the subject in '94, that simultaneously he saw both of those. Absolutely, as the largest maker of commercial carpet in the world, he had a responsibility to stop doing what we were increasingly being aware of, what we were doing to ecological systems, but from a business opportunity standpoint from efficiency, and innovation, and reputation, and cost, and productivity, we saw big opportunities.
SFG: Let's talk a little bit about some of the opportunities that you saw and took advantage of. How did you begin in 1994?
JH: Well, in 1994, we had no idea what was going on. It just began from a gathering of pesky California customers who started asking really obnoxious questions that nobody had answers for. I just happened to have joined the company from DuPont, and I think being the new kid on the block, I got the weird project. How do we create answers to these customers and that's something that's just always deeply rooted in Ray Anderson. He remembers founding a company, building a factory, having raw materials in the warehouse, people trained, everything ready to go and not one order on the books.
So when you have that experience absolutely driven into the core of who you are, you listen to your customers. They are very, very important, so we heard this question. We had to find an answer, and essentially like any new corporate program, you gather some people up together, do your benchmarking, figure out what the goal is, create the gap, create a plan.
I was pretty confident in '94 that we needed to have a brochure on the environment with the seals and the water and the trees, and maybe bonus points for that bald eagle on the front of the brochure, as well. But we had no idea of really the strategic possibilities that it had uncovered. I had asked Ray to come kick off this task force meeting of this group I had been assigned to lead. I knew nothing about the subject.
I was completely ignorant of the subject myself, and from the time when I asked him to come give the speech, and the time he actually did it, by pure serendipity, Paul Hawken's Ecology of Commerce showed up on his desk. He started thumbing through that book. Green book, green speech -- better get the factoids here, too, because I have no idea what to say. I'm pretty sure that obeying the law is not a very visionary statement, so what is it?
Well, he started reading the book and it absolutely hit him to the core of what it meant as a citizen, as a grandfather, as a business person that had created this company that he wanted to live and thrive and survive and be good. At the same time, that entrepreneur that had built that billion-dollar multinational enterprise saw the opportunity.
So that's how we got started in it, with a kickoff task force meeting. A bunch of people came together with very limited experience or idea of what it might be, and the big idea guy came in the room, dropped a bomb in the room and blew everybody's mind about what the potential and what the opportunity was, and we just started inventing.
SFG: As you pointed out, you pulled a bunch of people into a room and had no idea what you were doing. How do you get over the fear of moving beyond recycle bins and replacing light bulbs, and really embrace these concepts as a core business value?
JH: Well, there's several elements of that. One of them that I think is really important, and I harp on a lot, is unless you're able to translate these issues into the core issues of your business -- what is it that you do? What is it that your customers pay you for? I mean, really, what do they pay you for, and what are they trying to buy? If you don't connect sustainable development or environment or CSR -- or whatever title you put on it -- if you don't connect those right into that core, it's always going to be an afterthought. How much energy can you get wrapped around something that you just know isn’t the core of what you do, and you'll get to it when you get all the other important stuff done?
So that's one of the key hurdles to me, is translating this stuff in a way that is inseparable from who you are.
SFG: How did you do that at Interface?
JH: Well, in our case, Ray, from the very beginning, as a part of that epiphany, saw in his gut the potential of that to affect every part of the business that ends up adding up into earnings per share and an evaluation of our stock. Obviously, as everybody sees now, (there’s) the possibility of it improving your brand and reputation, but he quickly saw how efficient nature was and thought that there were ways of making the company much, much more efficient.
Saving money instead of the old (saying) -- particularly in the green building world -- ‘I can't possibly afford to build a green building. It's going to cost 25 percent, or 40 percent, or 50 percent more.’
Well, he saw that early on (but) didn't know how to do it. None of us knew how to do it, but the plausibility that this could radically improve our efficiency, so in Interface's case, from the very beginning, he was a visionary guy that made that linkage.
SFG: Can you give me some examples then of how that translated into actual initiatives?
JH: Oh, certainly. One of the very first things we did is we realized that we were just trying to figure out the big questions, so we didn't even have the big answers because we didn't even know the questions, really, at the very beginning. But one of our early mantras was just do something. We know that the goal is way, way out over the horizon, generally north by northwest, so start rolling that way. You can't go wrong. We're so early in the journey, but do something today, and do something else tomorrow and just keep going.
We started early on on just the general concept of waste, started looking at literally everything that we bought, we paid for that the customer wasn't willing to pay us for. That is waste, and that becomes scrap and energy, and particularly fossil fuels, and started focusing on those.
By beginning there, we created savings early on that has paid for this. This has been a money-making enterprise for Interface from the very beginning. Now we have saved and we have an accounting process we call QUEST that measures and standardizes cost. We believe we have saved $372 million dollars by applying these lenses of sustainability. We were already the No. 1 manufacturer of these kinds of products in the world, so I thought we were doing a pretty doggone good job then, and we've saved an additional $372 million dollars.
SFG: Tell me a little bit more about QUEST.
JH: QUEST is actually an acronym and you can tell it was invented by committee. It's Quality, Utilized Employee Suggestions and Teamwork. It ended up being very meaningful to us. It's how do you combine this idea of quality and waste, and individual participation. How do you get people educated on the issues of the environment, and waste, and how they can conserve? (We) provide them metrics to show what their contribution is to that, and (it’s) an engagement process that people can actually get engaged, get involved, and maybe even get some small financial incentives around this.
So QUEST really brought this idea that everyone can play a role in the company in the thousands and thousands of small steps that individual people do, in terms of saving energy, saving materials. That all adds up, and we think maybe half of that savings was just those, maybe now, tens of thousands of small activities that people have taken. The other half is getting the engineers and the scientists and thinking about how they (can) fundamentally change the big pieces of the technologies and the processes that we use.
So it was a pretty broad-scale approach that sought to, as I said, measure everything that we paid for that the customer wasn't willing to pay for. We defined that as waste, we sought out to completely eliminate that, and we've eliminated 50 percent of that in 10 years.
SFG: So you got started, you got everybody excited and going in the same direction. How did you at Interface, and how do you at any company, take it again to that next level? How do you go from the small steps to, as you said, half of it is the big picture things, getting engineers involved, and changing the business strategy? What does it take?
JH: Well, what I'll do is maybe transition a little bit from what we experienced by groping our way into this without benefit of Monday morning quarterbacking, as you might say, but now as a Monday morning quarterback, looking back at that game. What have we learned from it, and what can we advise the team to do next weekend or to other companies that we deal with or work for as Interface RAISE?
I know another one of the key ideas that we have used internally and sometimes externally even as we talk with potential clients as Interface, as a carpet company, is this basic idea of can you really make a green product in a gray company?
So thinking about what are the things that we are trying to do green, the list of green activities? Recycled content -- we're gonna do this, and in the building context, it's easy to think about (that). I put that in almost the idea of LEED. In the original form of LEED, there were 69 points and there was this list of activities that you should do to accumulate to become green.
Well, that's creating a green product and using a list of activities to help you do that. Well, at some point you start transitioning into just a shift in mindset, and you start thinking as a green organization, not necessarily a list of green things to do for that product. When you consciously think about how do I green the company, then that really expands the ideas and the opportunities to get people involved. And as people get educated and their mindsets start shifting, that's when the big ideas come out of that, the big opportunities for either savings or new products or new ideas that can drive revenues.
So one of the big ideas is get people away from thinking about the individual product, and what are the green things I can do to that product, and (instead) how do I start thinking as an organization in this way?
To be continued ...
Sarah Fister Gale is a freelance writer based in Chicago, Ill.