In a world of climate change and finite resources, any company that revolves its business strategy around sourcing natural ingredients is at risk.
With the tradition of using plant extracts in personal hair and skin care products, Aveda is no different.
The company -- which targets both the consumer and an even larger business-to-business market through a network of 8,000 third-party salons and spas worldwide -- continues to focus on sourcing from communities around the world such as the Yawanawá tribe of Brazil.
Aveda's approach to doing business with an eye on sustainability was put in place by founder Horst Rechelbacher when he launched the company in 1978. But over 30 years later, it has had to adapt its approach in response to a heightened sense of urgency about the environment and the indigenous communities that live off their native habitats.
It has also had to adapt to a new business environment as a subsidiary of a huge multinational. In 1997, Aveda was purchased by the Estée Lauder company, the owner of over two dozen well-known brands that for the most part don't share Aveda's laser focus on plant-based sourcing.
How, then, can the company navigate its need for a steady supply of natural ingredients, yet operate on a sustainable path? In a report that has yet to be released, Aveda shared with GreenBiz that it makes mention of learning how to do more with less, and is "cutting down on the number of new product initiatives, focusing on innovation and promoting better stewardship for the benefit of shareholders and stakeholders."
"I don't fully understand it, but there is a sweet spot where you can do the right thing strategically and also do what we all like to do to help make the planet more sustainable," Aveda CEO and President Dominique Conseil said at Thursday's GreenBiz Forum in San Francisco while in conversation with GreenBiz Chairman Joel Makower.
In his early years with the company, Conseil said, he remembered when Aveda launched 36 marketing initiatives in one year. “The organization thought that to survive, you need to feed the beast,” he said.
But he realized that the strategy was a forced innovation: “At the end of the day, consumers don’t need these things.”
Now, Aveda runs between 12 to 13 initiatives a year. The turning point came when the company realized it could gain greater market share with fewer offerings due to success with its thinning hair and hair repair product lines.
“We are winning market share aggressively with the approach,” Conseil said.
Photo of Aveda CEO Dominique Conseil speaking at GreenBiz Forum San Francisco 2013 by Goodwin Ogbuehi/GreenBiz Group
Next page: Managing risks to natural resources in the supply chain
Conseil readily admitted to Makower that the growing threats to the environment and natural resources -- via climate change, reduced biodiversity and species loss -- are risks to Aveda's business operations.
"It’s not just what you want to do but a question of self-conservation. If we don’t worry about it, we will have to change the kind of business we do," he said. "We've tried to limit risk for years by having several sources in different hemispheres."
Conseil said that Aveda has an environmental policy which focuses on doing business in a way that keeps in mind several domains, including climate change, toxics, biodiversity, loss of habitat, waste and pollution.
Yet for some plant extracts, such as essential oil from the Bavarian rose, it may be too late, according to Conseil. "There are not many substitutes," he said.
And ironically, the company's supply chain was threatened for months when guar gum -- a natural substance used in several Aveda products as well as in toothpaste and ice cream -- was out of stock due to its use in the hydraulic fracturing (fracking) boom. Made from beans mostly found in India, guar gum's thickening properties enable fracking fluid to blast through shale for oil and natural gas extractions.
To address risks, Aveda's research and development arm is "constantly finding better ways to be responsible" through reformulation, Conseil said.
But Conseil doesn't feel the tension within Aveda's founding vision of using natural products in sustainable ways is a bad thing.
"Sometimes if you focus on being sustainable, a cradle-to-cradle approach might lead you to a synthetic [approach]. When I look at this, the conjunction of opposites is what makes great things happen," he said.