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MIT Sloan Management Review

Sprint CEO: Customers not asking for green products

<p>Dan Hesse says green programs have cut company costs, but getting customers to care about green devices is a challenge.</p>

Over the years, Sprint has taken many steps to make its operations greener, such as reducing its paper use, squeezing carbon emissions from its supply chain and removing plastic from its packaging. At the same time, the telecom giant has also focused on its products, including the requirement that all of its cellphones receive green certification.

In this Q-and-A with Nina Kruschwitz at MIT Sloan Management Review, Sprint CEO Dan Hesse explains how the company's strong focus on sustainability is paying off in cost savings and long-term brand image, even if customers aren't yet paying attention to whether the phones themselves are green.

Nina Kruschwitz: Have you encountered any surprises in meeting sustainability goals?

Dan Hesse: One of the pleasant surprises we had as we got into building green devices was what was possible in terms of reusing recycled or biodegradable plastics; building devices without harmful chemicals like cadmium and mercury; what was possible in terms of energy efficiency; and what was possible in the industry by agreeing to support using universal chargers.

What has been a less pleasant surprise is how hard it is to get the consuming public to care that a device is green versus it not being green. My view is still "build it and they will come." Green devices sell well because they're good devices, but they don't seem to sell because they're green. Consumers are not yet asking for green.

NK: What's your theory about that?

DH: It just hasn't cracked the "Top 5," like rate plan, network coverage, device brand, screen size or the camera. In a few cases, sustainability might move the needle in terms of device choice.

We do a lot to educate our customers about green choices on our website and in the store. We have a green section in the middle of the store. We even have green accessories like solar chargers and cases for your phone that are made out of recycled materials. Even the boxes our phones come in are made of recycled paper, printed with soy ink.

We believe that over time, green will become more important. If all the devices are ULE platinum, well, it doesn't need to. We've made a difference at Sprint because the requirements that we've placed on our manufacturers and our suppliers have made the planet greener.

NK: How does customer indifference affect building a business case?

DH: We build business cases. One of the projects that provides positive value is we've made phones easy to recycle, either easy to take apart and take out the components that are reusable, and safely dispose of the stuff that isn't. That saves us money because we can resell components, or some phones can be shipped to other markets in the world where they still have a useful life.

But we also use a longer payback period or a lower hurdle rate than we might require of other investments. Typically, if we're going to make a capital investment, we want a payback within four years. With solar panels, it could take seven or eight years, but it's still NPV positive. So, you still do a business case, but you have slightly more relaxed criteria as long as it's still profitable over the long run. Because, as I said earlier, there's additional intangible value we believe that is created in terms of building a brand.

So getting an A-plus from the Global Reporting Initiative, the only company in our sector, being ranked the No. 3 greenest company in America by Newsweek, being the only telecom company selected to the Dow Jones Sustainability Index -- these are the kinds of things we try to assign a brand value to.

This article is adapted from "Who's the Real Audience For Sustainability Efforts?" by Nina Kruschwitz, which was published Feb. 24 by MIT Sloan Management Review.

Copyright © Massachusetts Institute of Technology, 2013. All rights reserved.

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