Five Strategies to Reinvent Business

Five Strategies to Reinvent Business

Most product-related "green" innovation focuses on modifying single product attributes, such as designing a computer to power-down when not in use. Only limited environmental improvement can be gained from simply enhancing existing products. At some point, the product concept itself becomes the barrier. Further environmental improvement requires development of new product concepts that substitute for existing products.



There are at least five strategies that facilitate the innovative culture needed to radically change products and processes toward sustainability.



1. Set Outrageous Goals



Outrageous goals sound impossible to achieve. They are often presented hypothetically during brainstorming exercises, and are an excellent way to bypass incremental thinking in favor of "out-of-the-box" thinking. DuPont and Xerox understand the value of setting outrageous goals. DuPont has an environmental goal of "zero waste." Xerox's environmental goal is "waste-free products from waste-free facilities."



The closer the product comes to the goal of zero waste, the greater the potential for profit, and the closer it gets to an optimum fit with customers' real needs, presenting greater opportunity for maximizing customer satisfaction.



To stimulate creativity ask, "What would we do differently to reduce the impact of our business on water and energy use (for example) by 100 percent and still meet the needs of our customers?" As an illustration, let's answer this question for washing machines.



The greatest environmental impact from washing machines occurs during use, not during the manufacturing, distribution, or disposal stage. Reducing the amount of water, the energy needed to heat the water, and the amount of wastewater produced yield a number of alternative technologies and complementary products, including:
  • Water- and energy-efficient machines such as those prevalent in Europe that rely on horizontal axis technology;



  • Washing machines that use only cold water accompanied by special cold water detergents;



  • "Dry" washing machines that clean clothes via a waterless agitation technology; or even



  • "Washing" the clothes in the dryer via some type of heat-activated dry cleaning technology.
Some ideas may seem unlikely solutions at first, but may prove to be possible in the future, thus suggesting a direction for long-term technological development.



2. Think Like a System



Rather than adjust specific product features, consider modifying the operating system. The "system" can be defined as the product value chain including procurement, design, manufacturing, marketing, and distribution. It can also be defined as a consumer use system (i.e., products related to it, or used with it). For example, producers can more than choose the best beans and packaging in making sure their customers get a good, hot cup of coffee. They can also consider the hardness of the water, the kinds of cups used, as well as sweeteners and whiteners.



Products have a life cycle with a number of discrete stages, including raw material extraction, manufacturing, distribution, in-use, and recovery or disposal. Thus far, product refinements primarily focus on reducing impacts at specific stages. Impacts can be further reduced by combining two or more life cycle stages.



For example, naturally colored cotton represents the combination of raw material procurement and processing (dyeing) phases of the life cycle. Xerox, who refurbishes its used copiers and sells them as remanufactured machines, combines the recovery/disposal and manufacturing stages of the product's life cycle.



A second tool to use in systems- thinking is industrial ecology. Industrial processes mimic nature's processes, where "waste" from one process becomes "food" for another. In Germany, for example, all new homes must be designed so that rainwater can be collected from rooftops for landscaping purposes. It may be possible, for example, for detergent makers to devise clean laundry powders that allow customers to water their lawns with the run-off from washing machines.



3. Dematerialize



The underlying notion here is to meet peoples' needs with as few materials and resources as possible, substituting services for physical products. Some strategies:
  • Product miniaturization, such as super-concentrated laundry detergents;



  • Multipurpose products, such as solar panels integrated into roofing and siding;



  • Leasing instead of purchasing products;



  • Replacing a product fully or in part by services, such as electronic voice mail in place of answering machines; e-mail and virtual libraries in place of postal mail and physical libraries.
To evaluate a product's potential to be dematerialized, ask:
  1. What is the simplest form in which we can deliver this product and still meet our customers' needs?



  2. Do our customers need to own this product? Can they lease it instead?



  3. Can we meet our customers' needs equally or better by providing them with a service instead of a product? For example, in agriculture, growers’ needs can often be met through integrated pest management services rather than purchasing pesticides.
In Europe, commercial copy machines are often leased rather than owned. Customers prefer leasing because they only pay for the value of the copier, and avoid the maintenance, repair, and disposal costs. Leasing is more economical since there is no up front layout, as well as convenient. From a sustainability standpoint, copier companies have an incentive to make their products as durable as possible so they will be productive for a longer period of time.



Xerox's copiers are now designed for disassembly and recycling. They refurbish used copiers and sell them as remanufactured machines in Europe, and use recovered parts in new machines in the U.S. They use recovered parts to service machines. Xerox gets a steady supply of parts from returned machines and customers get a quick turn around for parts - the wait is now two weeks instead of six months. Over five years, this program has saved Xerox $200 million in parts, inventory and labor.



In Europe, adding remanufactured machines to their product mix allows Xerox to compete in a lower price segment which they could not afford previously. They sell their copiers under such names as "EcoSeries" and "Renaissance." Customers receive the same three year warrantee as for new machines.



Volvo is redefining its business as "transportation" instead of supplying internal combustion vehicles. They are developing mass transit systems in China and global positioning systems that help vehicles and shipments get from one place to another more directly.



4. Make it Fit



Einstein once said: "Make things as simple as possible and no more." From a sustainability standpoint this means eliminating wasted resources by making products fit the real needs of customers as closely as possible.



Many automobile trips, for example, can be made in lower-tech vehicles that use fewer resources. Lee Iacocca and Robert Stempel, former CEOs of Chrysler and General Motors are marketing an electric bicycle which is targeted to individuals in retirement communities and college campuses, and plan to sell one million bikes per year. Another alternative is a bicycle outfitted for errands, with wide tires, a comfortable seat, and large collapsible baskets.



5. Restore Rather than Take



Products use resources and create waste. The goal in eco-related design projects is to minimize impact on the environment. What if the paradigm shifted to redesign products with the goal of restoring the environment?



Composting toilets restore nutrients to the soil as manure provides fertilizer for farms. Volvo announced in June 1998 that it will incorporate "PremAir" catalyst systems into its S80 model cars which destroy ozone created from other cars' pollution.



You might ask, "What would it take for our product to actually benefit the environment or society? Can our product educate people about key environmental and sustainability issues?”



The Hannah Anderson catalog of children's clothing encourages customers to return used children's clothing by offering a 20% discount on future orders. The company sends the clothing to the poor in a program they call "Hannadowns."



Managing Product and Organizational Change



These strategies are best used as part of an evolutionary process, which can assist in business reinvention and the development of more sustainable products and services. Many of the companies already practicing these strategies began the evolutionary process by doing what came naturally: Consider Interface's Evergreen Lease program and Xerox's asset recovery program as good examples.



Questions for forward-looking businesses:
  • What does sustainable development mean for our industry and our company? What are the implications for existing products and services? How can we turn long-term threats into opportunities?



  • Products don't have to be disposed - they can be more useful to society and more profitable for business if they can be reused or recycled into new products.



  • Customer needs can be profitably met with services rather than products, or an optimum combination.



  • Products don't have to be designed for obsolescence to be profitable. They can be more productive to society and the bottom line if they are durable.



  • Customers will reward businesses that help to restore the environment.
The biggest strides in environmental improvement will come through alternative products that serve as functional substitutes for existing products. Companies that are willing to take a step back, redefine their business, and acquire new technology and expertise to serve their markets in more efficient ways, will have opportunities to reap big rewards.



Firms that cling to established technologies and product concepts over the long-term risk being displaced by entrepreneurs willing to take a risk on more efficient, even restorative alternatives.



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Copyright © 1999-2001 Sustainable Business.com and Global Environment & Technology Foundation. From Corporate Environmental Strategy: The Journal of Environmental Leadership, Autumn 1998. Jacquelyn Ottman is president of J. Ottman Consulting, Inc., a NYC-based marketing consulting firm that advises companies on how to develop and market environmentally sound products. She is the author of Green Marketing: Opportunity for Innovation.
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