Society and customers expect more, and a sustainable business model delivers
Sustainability is on the radar screen of every major organization. Some organizations, such as Interface, Patagonia and Unilever, have made fundamental shifts to redesign their operations behind sustainable principles. These are sustainability leaders. For most organizations, however, efforts have tended to stall out after the easy work of reducing energy and waste.
But there is much more to sustainability. Eventually, designing operations and products with sustainability principles in mind must become the norm in every organization. It is not effective —nor will it achieve the results the planet so desperately needs — if it is a peripheral add-on to existing practices, or, as Bill McDonough often couches it, the effort just goes as far as "doing less bad." The most sustainable organizations are not ones that try to make marginal improvements on the way business is conducted, but make the sustainable way the normal course of business.
Organizations exist to meet a market need. This creates the conditions for financial sustainability. Increasingly, society expects more from business; that it undertake work to ensure the social and environmental sustainability of their operations and products. According to a recent Cone Communications study, 78 percent of Americans want companies (PDF) to address important social justice issues as well as deliver a product. This should give organizations pause and prompt them to ask tough questions of themselves.
Do products meet real needs without creating new problems?
Purpose is primarily to meet a customer need, but conscious companies understand the full impacts of the products or services they introduce into society. Taking a systems thinking approach to the design and delivery of products or services may allow for the discovery of other unintended impacts — both good and bad. Adding benefits beyond the core value can enhance customer perceived value, expand markets and make positive contributions to the world. Following the growing trend among consumers who expect business to do more than just make a profit, this examination of multiple potential benefits also helps create competitive advantages through brand loyalty and advocacy.
At the other end, products sometimes can meet one customer need while at the same time inadvertently create another problem in the process. Food products, for example, that satisfy consumers’ tastes sometimes contribute to health problems such as obesity and high blood pressure. Other products manufacture needs that may not really exist, creating unnecessary expenses for unsuspecting consumers who may not be able to afford them. These negative side effects can tarnish brand image when they come to the attention of the media, the public, regulators or customers.
Do products help customers be sustainable?
For many products or services, the biggest impact is downstream; how consumers use them or behave in the process of using them. Insurance companies, for example, typically have a low environmental footprint in their operations, but can have a huge impact in how their customers behave through the design of their policies. They can influence how much or what people drive, where and how they live, and how healthy their lifestyles are simply through policy design.
Companies have an enormous opportunity to encourage sustainable customer behavior by the way they design or shape their offerings. As customers’ behaviors change, their demand for sustainable products and services increases. This "virtuous cycle" moves the society in a more sustainable direction and builds market opportunities at the same time. Demand for electric vehicles, for example, is on an exponential growth curve.
Are customers honored?
While some businesses hope to have ongoing relationships with customers (such as personal care products and software), others may be temporary (such as building contractors and surgeons). But in all cases, customers want to feel the company empathizes, appreciates and adds value to their lives. No one likes to feel manipulated. In advertising, for example, Dove’s Campaign for Real Beauty attempts to build girls’ self-esteem, moving away from the traditional cosmetics strategy of making customers feel insufficient. A lack of familiarity with culture, language and norms ultimately can lead to product failures such as body-care brand Nivea’s "White is Purity" ad campaign or Bic’s unfortunate tagline, "Look like a girl, act like a lady, think like a man."
How are the needs of underserved markets understood and met?
Delivery channels through which products and service are provided can create barriers for some customer groups. Considering these barriers while designing the channels not only can honor neglected audiences but also potentially increase sales. Channel barriers come in many forms: physical disability; language preferences; literacy; access to technology; and cultural mores. To make significant progress in reducing social equity gaps, organizations must increase the accessibility of marginalized segments of society. Affordability is a key driver of access. How can a business model be designed to allow for multiple price and delivery schemes to reach "base of the pyramid" markets who might benefit the most from innovative offers?
How is trust established and maintained with stakeholders?
Intangibles such as brand image and goodwill are often the most important and valuable assets for most organizations. The value of customer loyalty and advocacy never has been more important than in this age of the mesh — a highly connected world enabled by social media. Trust is built on competence and character. Character is demonstrated through openness, honesty, consistency and follow-through. Figure out what might be important to customers in their decision-making process and make it easy for them to access credible, timely and accurate information. It can take years to develop trust and just one misstep to lose it.
This article is part one of a three-part series based on the Business Sustainability Booster, a free business planning tool created by Marsha Willard and Darcy Hitchcock and offered through the Presidio Graduate School. The tool is designed as an overlay to the Business Model Canvas to help business leaders design sustainability into a business from the start.