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Ford, SC Johnson and HP may hail from disparate industries, but these Fortune 500 companies have at least one thing in common: They're integrating environmental factors into the design of their products in ways that enhance value yet create fewer environmental impacts.
Ford has created a soy-based seat cushion foam, for example, while SC Johnson uses a green list process to weed out restricted ingredients. HP, meanwhile, cut packaging on a recent product by 97 percent.
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These are the types of innovative examples you'll find in the book, "Design for Environment." An updated edition comes out in July.
Today we're being joined by its author, Joseph Fiksel, who is also the executive director of Ohio State University's Center for Resilience and a featured speaker at GreenBiz.com's upcoming Greener By Design conference. We'll explore the principles behind the Design for Environment framework, and Joseph will explain what's driving this movement and offer advice to companies new to the game.
Tilde Herrera: Well, thank you so much for joining me today, Mr. Fiksel. I know that you have a new book coming out in July called "Design for Environment" that examines how companies are designing successful, profitable products yet these products have fewer environmental impacts.
What would you say are the factors driving this?
Joseph Fiksel: Well, there are a number of drivers, beginning with external drivers that come from the business environment. These are things like governmental initiatives from both international and U.S. agencies, such as the waste and electronic equipment ordinances that require companies to design their products with end-of-life in mind.
There are a variety of environmental management systems standards like ISO-14001. We have sustainability rating schemes such as the Dow Jones Sustainability Index. All of these are pushing companies towards greater awareness of their environmental performance.
We also have things like eco-labeling, where companies are actually putting labels disclosing the environmental properties of their products. And we have various codes of conduct, such as the Ceres principles.
However, in my opinion the really important drivers are not so much the external drivers but it's the business drivers. And those have to do with recognition by companies that there is value associated with adopting sustainability and environmental principles.
And that includes both the tangible drivers: opportunities for improved efficiency, for improved asset utilization, reducing risks and growing the company. It is also the intangibles, things like reputation, the strength of alliances with customers and suppliers licensed to operate and licensed to grow. And one very important one is just human capital: Establishing greater pride and loyalty among employees and being able to attract and retain talent.
The one thing I didn't mention is the market drivers and that is customers who are expecting more from companies, expecting them to behave in an environmentally responsible fashion, to produce products that have a smaller environmental footprint.
This is more coming from industry customers as opposed to consumers in the marketplace. However, there's a growing minority of consumers that are also looking for this.
TH: Generally speaking, do you think that companies are moving quickly enough to move the needle forward in terms of product design?
JF: Well, there are some early adopters that have been working on this for years. Starting back in the '90s, there were some industry sectors that really embraced these ideas in the field of electronics, in chemicals, even in consumer products, companies like P&G, DuPont, HP and so forth.
However, I'd say maybe 10 percent of the Fortune 1000 companies are really invested in integrating this kind of thinking about Design for Environment into their products and processes.
And so in answer to your question there's not enough being done to move the needle forward significantly. Companies are somewhat hampered by the need to be competitive. I believe that what's needed is more collaboration within supply chains and across industries, including public/private collaboration to create business conditions where companies can really make more radical moves towards improving environmental performance.
TH: Now how would you define Design for Environment?
JF: I define it very simply as a systematic consideration of the performance of a product design with respect to environmental health, safety and sustainability objectives. Taking into account the full lifecycle of the product from supply to manufacturing to customer use and to eventual disposal.
If you look at the current practice today among leading companies most of them follow these kinds of principles. The first one is the idea of lifecycle thinking. I mentioned the different lifecycle stages. Some people talk about going from cradle to cradle -- from the initial extraction of resources from the environment to the end of life of the product and then the recovery or recycling of those materials, which we consider assets basically. They shouldn't be thrown away.
So that encourages sort of a broad systems view of the supply chain. When you design you shouldn't just think about the product in its use but think about everything that goes into the product before it's made and after it's obsolete.
The second major point is measurement. It's really important to be able to measure environmental performance using metrics that reflect potential adverse impacts as well as opportunities. To give you an example, DuPont has introduced a metric which they call shareholder value per pound. So they look at how much value am I creating for each pound of material that I produce.
So that's not a traditional environmental metric which measures negative impacts like pollution. It's a measure of actual value creation based on the efficiency and the resource efficiency of their processes.
Now there are other principles that are documented in the book which have to do with design strategies. And there's a number of different ways to go about trying to design sustainable products.
One is what we call dematerialization, which means basically reducing the throughput of resources necessary to create and support and service the product.
To give you an example of that, packaging is a major area of opportunity. HP was able to reduce the packaging on their Pavilion notebook on one of their models by 97 percent, which is amazing.
Another kind of opportunity is using renewable materials instead of using synthetic or scarce materials. For example, Ford has introduced soy-based foam for the seat cushions on all of their vehicles, or a lot of their vehicles. And since that's renewable, it doesn't deplete environmental resources. It also reduces carbon emissions. There's a lot of concern today about greenhouse gas emissions, and Design for Environment principles will basically reduce the energy and material footprint of a product.
A more radical way to do this is to actually convert from selling a product to providing a service. And we've seen a number of companies and new businesses spring up that are substituting services for products. An example is Zipcar, which you may have seen in your municipality.
Instead of owning a car you can go and lease a car for a few hours and then just drop it off somewhere when you're done with it. Those vehicles have much higher utilization, and so overall, this makes us much more efficient in our use of transportation resources.
Some of the other principles we talk about are things like detoxification, which means eliminating hazardous or toxic substances from a product. For example, SC Johnson has a green list process where they list all of the materials that are acceptable and all those that are restricted, and they've managed to eliminate things like PVC and other unwanted materials from their products.
Another major principle is revalorization, which means recovering value from a product at the end of life. A good example of that is Caterpillar. They have established a remanufacturing division where they take old engines that are basically used up and broken down and remanufacture them into new engines and they warranty those engines as if they were new.
Instead of throwing the engine in the junk heap, it's reborn. They have about 4,000 employees worldwide that are working in their remanufacturing division, and it's one of the most profitable divisions.
There are some other issues. For example, designing to protect capital, including natural capital --things like worrying about water resources. Coca-Cola has been the champion for water use reduction and for water resource protection throughout the world. And that's because, of course, water is intrinsic to their product.
We found that the most successful design initiatives are from companies who recognize the key environmental issues associated with their products and are trying to link their products to the ecological services that they depend upon -- things like water, minerals, land and so forth.
TH: Well, you just gave us some examples of how companies are looking to Design for Environment to enhance their businesses, but earlier you said that only 10 percent of the businesses or the Fortune 1000 companies would be considered early adopters. Why aren't more businesses turning to Design for Environment to enhance their companies?
JF: Yes. I told you some of the success stories and they are exciting, but there are many barriers to doing this.
The vast majority of companies don't have experience and aren't familiar with these ideas. It takes a concerted effort to build up that capability. Some companies have had a few successes but they have not institutionalized the processes that are needed to do it over and over repeatedly.
One of the important things about Design for Environment is that it has to become a systematic business process. It has to become part of the innovation process. Otherwise you have these one-off and two-off interesting anecdotal stories but you don't have consistent success over time.
Companies like 3M, P&G and others have incorporated Design for Environment metrics and guidelines into their cross-functional development process so every product team actually has people on it who are concerned with environmental performance and are coming up with ideas and critiquing the ideas as they go along so that right from the concept stage this awareness is built in.
TH: So what kind of advice would you offer to companies who are struggling with integrating Design for Environment principles across their companies?
JF: Well, I think it's important to start with a particular focus, to pick a product line or division where environmental issues are really important so where there's a clear business value proposition: "If only we could do 'X', we would gain market share, we could significantly decrease our cost of production, or we would reduce our supply chain risks."
So once you can locate an example like that, it's possible to field a team and sort of run an experiment where you say, 'Let's do this right from the beginning. Let's think about the full lifecycle of our product, examine all the pros and cons and design a concept that we think is really fit for these future issues that could undermine the success of the product.'
Some people call that concurrent engineering, and actually there are a lot of companies that practice concurrent engineering, but many of them don't include sustainability as one of the issues that they think about in that front-end conceptual development.
Once a company has a success with an experience like this, that would give them a basis to go forward and try to roll up a process that fits with their overall corporate business processes and can be disseminated through the different divisions. That generally does require some training. It requires some development of procedures.
For example, you need tools as part of your 'stage gate' decision process. What 'stage gate' means is that there are different stages in the development of a product from concept to overall engineering to detail design, eventually to manufacturing release. And so at each stage you need to have rules and guidelines and criteria for deciding that the product meets your requirements.
So, in order to make this process repeatable and kind of a routine part of the operations, it does take some work. But as I say, it's best to start with an obvious success where there's going to be a clear win if the environmental performance can be built in from the start.
TH: So, what are the big takeaways here? What are the things that businesses need to know?
JF: A lot of companies see barriers to doing Design for Environment. The barriers include lack of familiarity, lack of time, perceived costs, concerns about delay.
In my opinion, designing for environment should expedite the product development process by allowing the product to be released that meets all the downstream concerns. Sometimes companies discover too late that they included some restricted material that has problems and they have to go back and redesign the product and that introduces delays.
In the product development world, time to market is sacred so environmental design should be done with attention to accelerating the time to market by considering all of the environmental, health and safety issues that could be a concern downstream. You don't want to discover those later because it's much more expensive. So my advice would be for companies to try to be more forward-thinking and more proactive in how they deploy their environmental resources. Don't check things after the fact but think about it early in the game when there's still a lot of degrees of freedom.
I think the second major takeaway is partnering. It's really difficult to do this alone and I think companies should try to partner with their suppliers and the customers and even with their stakeholders.
For example, there are a lot of companies that have worked with environmental groups, such as Environmental Defense or World Wildlife Fund, and those groups will work with companies to help them design products that would meet environmental concerns and constraints and actually give them a competitive advantage.
Suppliers and customers also can be tremendous partners in that they can think through the product requirements and needs from their perspective. Rather than assuming that your supplier will deliver a product in a certain way, you can discuss with them what the options are and come up with brand new solutions that overcome what people thought might be a constraint.
This is called co-creation of value. I'll give you an example. Intel has worked with its customers, which are of course computer manufacturers and other electronics companies, on how to manage the movement of chips from the fabrication factory to the assembly location where they're eventually installed in computers.
Chips are very delicate. They may require careful handling. And Intel has devised these trays, plastic trays that are reusable, and the chip can travel in those trays from the fab to the customer and then cycle back again to Intel for reuse. And they have saved millions of dollars in finding ways to basically reduce the amount of packaging required to transport those chips and they've also streamlined the whole process because they've gotten cooperation from the customers in terms of closing the loop.